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Guernsey funds sector demonstrates stability over third quarter

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Guernsey’s financial services regulator has approved 42 new investment funds for the second quarter in succession, resulting in a total of 140 additions during the 12 months to the end of September.

Figures from the Guernsey Financial Services Commission (GFSC) show that 30 new funds were approved during the fourth quarter of 2013, 26 in the first quarter of 2014 and 42 during both the second and third quarters of this year. Overall, the net asset value of all funds under management and administration in Guernsey fell by GBP0.4 billion (1.1%) during the third quarter to GBP260.9 billion at the end of September. 

Dominic Wheatley, Chief Executive of Guernsey Finance – the promotional agency for the Island’s finance industry, says: “It is encouraging to see that Guernsey continues to attract new funds and that both the open-ended and closed-ended funds sectors grew in value during the last quarter. The figures demonstrate the solidity and stability of our funds industry and the continuing attractiveness of Guernsey as a funds centre.

“For example, only recently Investec Asset Management has migrated and re-domiciled a USD1.2 billion fund from Ireland to Guernsey due to our dual regulatory regime in respect of AIFMD [the Alternative Investment Fund Managers Directive]. This is a huge vote of confidence in our funds industry. We have also heard that a number of funds are being moved here from the Cayman Islands because of the effectiveness of our national private placement regime for distribution into the EU.”

Vic Holmes, Chairman of the Guernsey Investment Fund Association (GIFA), says he is encouraged by the current health of the Island’s funds industry.

“National private placement regimes are generally working well in most European countries and proving popular for fund managers based outside the EU. Since the introduction of AIFMD, promoters have recognised the advantage of Guernsey’s ability to distribute funds into both European and non-European jurisdictions to best meet their specific circumstances. We also remain the preferred jurisdiction, excluding the UK, for the listing of vehicles on the London Stock Exchange, with figures to the end of November showing 119 Guernsey-incorporated entities listed on its various markets.

“Overall, Guernsey’s funds sector is in a stable position. We’ve seen growth in the number of new funds and a positive response to our regime under AIFMD. As an association we will shortly be submitting our response to ESMA’s consultation paper on whether or not AIFMD passports should be extended to third countries and will do our utmost to ensure that Guernsey is part of the first wave of approved jurisdictions when the third party passports come into effect.”

The 42 new investment funds approved by the GFSC between the start of July and the end of September comprised three open-ended funds, eight closed-ended funds and 31 non-Guernsey open-ended schemes. Taking into account licences relinquished, this represents net growth of 17 funds during the quarter and takes the total number of funds currently approved for domiciling or servicing in Guernsey to 1,125.

Guernsey open-ended funds increased in value by GBP1 billion (2.5%) to GBP41.7 billion, while Guernsey closed-ended funds also increased by GBP0.1 billion (0.1%) to GBP135.8 billion. Non-Guernsey schemes – open-ended funds that are not domiciled in Guernsey but where some aspect of management, administration or custody is carried out in the Island – decreased in value by GBP1.5 billion (1.8%) during the third quarter to reach GBP83.4 billion at the end of September.

Wheatley says: “It was pleasing to see that during the last quarter we added 22 non-Guernsey schemes. This reflects the significant substance which already exists in Guernsey, especially in comparison to some other jurisdictions, something that is likely to be an increasingly important differentiator moving forward.”

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