Fund Intermediary Agreement

A fund intermediary agreement is an essential document that governs the relationship between a fund manager and an intermediary who assists in the distribution or sale of the funds. The agreement outlines the roles and responsibilities of both parties, as well as the terms of their compensation and termination.

The primary goal of the fund intermediary agreement is to ensure that the interests of the fund manager and the intermediary align, and that both parties work towards the mutual success of the fund. This is achieved through the establishment of clear expectations and guidelines for the intermediary’s activities, such as marketing and promoting the fund, providing customer support to investors, and reporting on sales activity.

One of the critical components of the fund intermediary agreement is the compensation structure. This outlines the fees or commissions that the intermediary will receive for their services. There are a few types of arrangements that can be made, including front-end load, back-end load, and asset-based fees.

Front-end load fees are typically a percentage of the initial investment made by the investor, whereas back-end load fees are paid when the investor sells their shares of the fund. Asset-based fees are usually a percentage of the total assets under management, paid on an ongoing basis.

It’s critical that the compensation structure is clearly defined and agreed upon by both parties to avoid any misunderstandings or disputes in the future.

The fund intermediary agreement also includes provisions for termination. This outlines the circumstances under which the agreement can be terminated and the process for doing so. For example, the agreement may be terminated if either party fails to perform their obligations or if there is a material breach of the agreement. The process for termination should be clearly outlined to ensure a smooth transition and avoid any negative impacts on the fund or investors.

In conclusion, the fund intermediary agreement is a crucial document that protects the interests of both parties involved in the distribution of funds. The agreement outlines the roles and responsibilities of the intermediary, the compensation structure, and the process for termination. As a fund manager or intermediary, it’s essential to have a comprehensive and well-written agreement to ensure a successful and mutually beneficial relationship.