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Guernsey fund assets grow more slowly in second quarter

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The growth of funds domiciled or administered in Guernsey slowed in the second quarter of this year but the island’s finance industry is continuing to perform robustly despite the credit c

The growth of funds domiciled or administered in Guernsey slowed in the second quarter of this year but the island’s finance industry is continuing to perform robustly despite the credit crunch, according to Peter Niven, chief executive of industry promotional agency Guernsey Finance.

The value of funds under management and administration in the island grew by 1.7 per cent over the three months to the end of June, although bank deposits fell by 1.1 per cent, according to the Guernsey Financial Services Commission.

‘The figures show that flows of business into the island have slowed over the past few months,’ Niven says. ‘This reflects the fact that in the wider markets there is less confidence as a result of the credit crunch. Notwithstanding this, it is encouraging to see that overall Guernsey’s finance industry continues to perform robustly.’

Overall fund assets domiciled and/or administered in Guernsey now stands at GBP207.2bn, up GBP3.4bn from the end of March and by GBP51.6bn (33.2 per cent) over the pas 12 months.

‘It is very good news indeed that despite the market conditions we are still seeing funds business coming into the island,’ Niven says. ‘There is still a lot of international corporate wealth out there looking for a structure and that is what we are so experienced and skilled at catering for. But what we need to see is greater confidence to put the business into place.

‘As a result of this fragile confidence we have seen a slowdown in the growth of our funds business, but in some respects this has been beneficial. At the current rate practitioners can make sure that service levels on the substantial business that they have taken in over the past few years are as high as we would expect and that they are well placed for when confidence returns and business levels increase.’

The assets of Guernsey-domiciled open-ended funds grew by GBP2.2bn (3.1 per cent) in the second quarter and by GBP11.1bn (17.7 per cent) since June 2007 to reach GBP73.7bn. The closed-end fund sector saw even stronger growth, with increases of GBP5.8bn (7.3 per cent) over the quarter and 22.4bn (35.9 per cent) over the previous 12 months to GBP84.8bn.

The assets of non-Guernsey schemes for which some aspect of management or administration is carried out in the island declined by GBP4.6bn (8.6 per cent) to GBP48.7bn over the three months to the end of June, a fall attributed to the negative performance of the global hedge fund sector in this period. However, non-Guernsey fund assets are up by GBP18bn (58.6 per cent) year on year

In the second quarter the regulator approved 14 Qualifying Investor Funds and a 21 Registered Closed-ended Investment Funds received consent, with a further five registered funds receiving consent since then.

Between the launch of the Qualifying Investor Fund regime in February 2005 and the end of June this year, a total of 205 QIFs have received consent or approval. The number of Registered Closed-ended Investment Funds, a regime introduced in February 2007, now stands at 123.

Peter Moffatt, director of investment business at the Guernsey Financial Services Commission, says: ‘These figures demonstrate once again that despite international uncertainties, Guernsey retains its status as a preferred domicile for investment funds.’

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