Asset management as a service

A white label fund names two parties in its documents. The initiator is the bank or asset manager whose investment idea the fund follows and whose name it often carries. The management company holds the authorization as a UCITS management company or as an alternative investment fund manager (AIFM), runs risk and liquidity management and reports to the supervisor. When the initiator holds a license for portfolio management, the management company can delegate the investment decisions to it, and otherwise the initiator only advises while the management company decides.

Around these two parties work the service providers that every fund needs. A depositary keeps the assets and checks that the fund follows its rules, and the fund administrator calculates the net asset value and keeps the register of unit holders. Distribution runs through banks and fund platforms such as Allfunds, which connect fund houses with the firms that sell their funds. Some providers bundle the whole chain, and Universal Investment calls itself a fund service partner and Super ManCo with more than 5,000 fund and investment mandates in Frankfurt, Luxembourg and Dublin.

The UCITS Directive and the AIFM Directive allow a management company to delegate tasks such as portfolio management, but the liability never moves with the task. Under Article 82 of Delegated Regulation (EU) No 231/2013, an AIFM becomes a letter-box entity when it lacks the expertise to supervise its delegates, loses the power to decide on the investment policy or delegates investment management far beyond the work it still does itself. A manager in that position is no longer considered the manager of the fund.

Directive (EU) 2024/927, which member states had to apply from 16 April 2026, tightens both points. An AIFM now notifies its supervisor before a delegation becomes effective, and a manager that runs a fund at the initiative of a third party, including a fund that uses the name of that initiator, must give the supervisor detailed explanations and evidence of how it prevents or manages conflicts of interest with the initiator. The amended UCITS Directive places the same duty on UCITS management companies that run a fund for an initiator. For fund managers based in Luxembourg, the supervisor CSSF requires in Circular CSSF 18/698 that every manager employs at least three full-time staff at its head office who perform key functions, and it treats a delegation that turns the manager into a letter-box entity as a breach of the authorization.

In Germany, section 36 of the Capital Investment Code (KAGB) sets the conditions under which a fund management company may outsource tasks. Portfolio management of a UCITS, and portfolio or risk management of an AIF, may go only to firms that are licensed or registered for asset management or financial portfolio management and that are supervised. Neither task may go to the depositary, and the management company must notify BaFin before the outsourcing agreement takes effect. The management company answers for any fault of the outsourcing firm as for its own, and the sales prospectus must list every task it has outsourced.

Fund management companies and AIFMs are also financial entities under the Digital Operational Resilience Act (DORA), with an exception for small AIFMs that are only registered. When a provider runs fund accounting or investor reporting as an ICT service, the contract has to meet the DORA requirements for ICT third-party providers. Banks that hand tasks to a provider follow a parallel regime under section 25b of the Banking Act and the outsourcing rules for German banks.

An actively managed certificate (AMC) is a structured product: a bank or another issuer issues a tracker certificate on a basket of securities, and an investment manager decides which securities the basket holds and how they are weighted. In the simplified prospectus of an AMC of Banque Cantonale Vaudoise, the investment manager may rebalance the basket up to 36 times a year, and the issuer states that the product is not a collective investment under the Swiss fund law and is not supervised by FINMA. Investors therefore carry the credit risk of the issuer and get a product that comes to market without fund approval.

Swiss platforms sell the launch of an AMC itself as a service to portfolio managers. GenTwo in Zurich describes its AMC Creator as a self-serve tool with which regulated financial professionals bring an AMC to market and obtain a Swiss ISIN within days. In the Ephelia group, Ephelia Capital, a portfolio manager in Lugano with a FINMA authorization, structures actively managed certificates. For qualified investors, Switzerland has also offered the Limited Qualified Investor Fund (L-QIF) since 1 March 2024, a fund that needs no FINMA authorization or approval but must be managed by an institution that FINMA supervises.

On 3 June 2026, FINMA published Guidance 03/2026 after a sharp rise in cases escalated to it that involved portfolio managers under Article 17 of the Financial Institutions Act. In these cases, managers often placed foreign funds, AMCs or securities of issuing and structuring companies into client portfolios, and the complexity and limited liquidity of those products led in some cases to substantial losses. FINMA found in-house products without adequate conflict-of-interest measures and non-transparent double fee charging, and smaller firms had outsourced risk and compliance controls to providers that need no authorization.

The EU rules target the same weak points from the side of the fund. A white label fund separates the brand from the license, so investors see the name of the initiator while the management company carries the legal duties, and the new conflict-of-interest evidence under AIFMD II aims at that relationship. A management company that delegates so much that it keeps no real control loses its status as manager under the letter-box rules, whatever the contracts say.

A fund that already runs with a service provider can add a tokenized share class without changing its manager. In Germany, the Crypto Fund Units Ordinance (KryptoFAV) lets a fund issue all or part of its units, or individual share classes, as crypto fund units, which are electronic units entered in a crypto securities register. The register is kept by the depositary or by a firm the depositary commissions that holds a BaFin license for crypto securities register keeping. Subscriptions and redemptions then mint and burn tokens, and the fund restricts transfers to eligible wallets, which are the core mechanics of fund tokenization.

A white label fund is an investment fund that a licensed management company launches and runs for another firm, the initiator, whose strategy the fund follows and whose name it often carries. The management company keeps the authorization and the liability, and under AIFMD II it must show its supervisor how it handles conflicts of interest with the initiator.

A host AIFM is an authorized manager of alternative investment funds that takes on funds for initiators without an AIFM license of their own. The host is the legal manager of the fund and runs risk management and regulatory reporting, while the initiator manages the portfolio as a delegate when it holds the license for that, or advises the host. In Germany a fund management company needs authorization from BaFin under section 20 of the KAGB, which is why initiators without it work with such a host.

An AMC is a debt security of its issuer, so investors depend on the credit of the issuer, while the assets of a fund form a separate pool that a depositary keeps. A UCITS needs approval by the supervisor and follows the diversification and liquidity rules of fund law, while platforms offer to issue an AMC within days. FINMA named the complexity and limited liquidity of AMCs as factors that raised the risk in the cases it examined.

Outsourced portfolio management means that a bank, insurer, pension fund or foundation hands the investment decisions for its own assets or for client mandates to an external manager. Pension funds and foundations call the model an outsourced CIO, and banks can buy in model portfolios that their own advisors implement. An investment firm that outsources a critical function remains fully responsible for its obligations under MiFID II, according to Article 31 of Delegated Regulation (EU) 2017/565.

A fund platform connects fund houses with the banks and brokers that sell their funds, and it processes orders and transactions for both sides. For a white label fund, a listing on such a platform is the route to distributors beyond the initiator. Allfunds runs an open-architecture platform of this kind, and its blockchain unit works with Solana on the distribution of tokenized funds in Project Harmonia.