Block D · Funds & vehicles
‹ NadirAlpha financial markets handbook: overview
Independent NadirAlpha working reference. Product and feature names mentioned are trademarks of their respective owners. No investment advice.
Vehicles are the wrapper, not the content; the same asset class can have entirely different cost, tax and liquidity characteristics depending on the shell.
47 · Active mutual funds
Daily tradable segregated fund assets (UCITS) with active management against a benchmark.
Delegated stock selection; niches where active management can add value.
Outperformance potential; segregated fund assets = insolvency-protected.
The majority do not beat the benchmark after costs; fees of 1-2% p.a. Style breaks on manager changes.
Buying funds on 3-year performance; reversion to the mean is the rule.
48 · ETFs (physical/synthetic) · 111 · Beta & alpha · 114 · Information ratio & tracking error
48 · ETFs (physical/synthetic)
Exchange-traded index funds; physical (securities held) or synthetic (swap-based).
Cost-efficient core of the allocation; tactical building blocks.
Costs from ~0.05% p.a. Transparency; liquidity.
Tracking difference; spread in stress phases; counterparty risk with swap ETFs (collateralized); securities lending.
Comparing only the TER; tracking difference and trading costs are what matter in reality.
137 · Indices & benchmarks (construction) · 133 · Bid-ask spread
49 · Index funds (non-listed)
Passive funds without exchange trading; purchase/sale once a day at NAV.
Long-term savings plans, institutional mandates.
No spread; no intraday behavioral risk.
No intraday reaction possible; smaller selection than ETFs.
Seeing the missing exchange listing as a drawback; for long-term investors it is often a behavioral advantage.
50 · Money market funds
Funds in short-dated, high-quality money market instruments; yield close to the policy rate/ESTR.
Cash management beyond deposit insurance limits; diversification of bank risk.
Daily liquidity; interest close to market rates.
No deposit insurance; minimal price fluctuation; liquidity clauses possible in extreme crises.
Equating them with overnight deposits; legally a fund unit, not a deposit.
51 · Mixed funds/multi asset
Funds across several asset classes with fixed or flexible allocation steering.
One-product solution; delegated asset allocation.
Built-in rebalancing; risk steering.
Costs on allocation AND selection; comparability difficult; flexible funds often time poorly.
Comparing mixed funds without looking at the actual allocation; "defensive" is not standardized.
52 · Funds of funds
A fund that invests in other funds.
Maximum delegation; access to manager selection.
Broad diversification across managers.
Double layer of costs; loss of transparency.
Underestimating double costs; 2 x 1.5% eats the premium of almost any strategy.
53 · Target date funds/fixed maturity funds
Funds with a fixed end date; the allocation turns more defensive towards the target (glidepath), or bonds are held to maturity.
Goal saving (date known); fixed maturity funds as a bond ladder substitute.
Predictability; discipline built in.
The glidepath does not suit everyone; costs; with fixed maturity funds, reinvestment at the end.
Treating target date funds of different providers as identical; glidepaths differ strongly.
54 · ELTIF
EU vehicle for retail access to illiquid investments (PE, infrastructure, private debt); significantly opened up since ELTIF 2.0 (2024).
Adding private markets without institutional minimum sizes.
Regulated access; lower entry hurdles.
Illiquidity despite redemption windows sometimes offered; costs; young market.
Confusing redemption windows with daily liquidity; in stress, windows close.
7 · Private equity · 9 · Infrastructure
55 · Spezialfonds (institutional)
German AIF variant for (semi-)professional investors, tailor-made investment guidelines, one or few investors.
Standard vehicle for insurers, pension schemes, large family offices; pooling + reporting + master KVG (management company).
Individual guidelines; tax/accounting advantages possible.
Fixed costs only pay off from double-digit millions.
Not cross-checking master-KVG reporting with one's own analytics (PORT).
56 · ETCs/ETNs
Exchange-traded notes on commodities (ETC) or indices (ETN); legally NOT segregated fund assets.
Access to single commodities/crypto where a fund structure is not possible.
Simple exchange access; physically backed gold ETCs are established.
Issuer/structure risk; roll costs with a futures basis.
Equating an ETC with an ETF; insolvency protection depends on the collateral construction.
57 · Certificates (structure, issuer risk)
Structured notes of a bank with a defined payoff profile (discount, bonus, express, capital protection).
Tailor-made profiles (buffer, yield enhancement, partial protection).
Profiles beyond "long only".
Issuer risk; cost opacity; complexity; secondary market provided by the issuer.
Seeing the return opportunity but not the embedded option premiums and issuer margin.
155 · Counterparty risk (counterparty)
58 · Discretionary mandates
Individual or standardized management of the portfolio by an asset manager according to investment guidelines.
Delegation with direct security ownership (instead of a fund wrapper); reporting and a personal contact included.
Transparency down to single securities; individual restrictions (ESG, exclusions).
Quality disperses; costs; comparability lower than with funds.
Judging the mandate's result without a suitable benchmark and without risk adjustment.