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Jersey sees fund industry resilience in launch of 26 unregulated funds

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The launch of 26 unregulated funds in Jersey since their introduction on February 19 this year represents a solid start for the unregulated regime despite a tricky market environment, acco

The launch of 26 unregulated funds in Jersey since their introduction on February 19 this year represents a solid start for the unregulated regime despite a tricky market environment, according to Robert Kirkby, the technical director at industry promotional body Jersey Finance.

‘Considering that the number of fund launches generally has slowed, the industry is encouraged by such a promising start,’ he says. ‘We are seeing significant interest in the new regime and law firms on the island have reported a surge of enquiries about the new rules.’

The types of fund established under the unregulated regimes for sophisticated investor vehicles and exchange-traded funds include cell company structures for multistrategy funds as well as real estate and private equity funds.

Reflecting the current global interest in environmental issues, a number of unregulated funds have been created to invest in the green sector, including one fund investing in solar power projects and others for financing high tech, biotech and environmental schemes. Funds have been launched to raise finance for property and land acquisition in London, California and Brazil.

Unregulated Eligible Investor Funds and Unregulated Exchange Traded Funds established under the new regime have no audit requirement, no limit on the number of investors, no investment or borrowing restrictions and no requirement to use Jersey service providers, although they remain subject to Jersey’s anti-money laundering requirements. Not requiring any regulatory assessment before launch, they enable fund promoters to respond rapidly to market opportunities.

The Unregulated Fund rules complement the existing Expert Fund regime, which has been the catalyst for the rapid growth of the funds sector in the island over the past four-and-a-half years to GBP244.2bn in assets under administration at the end of June.

‘In the last quarter, Jersey still recorded the launch of 37 new funds in the regulated sector, despite the challenging market conditions that all jurisdictions are now experiencing,’ says Jersey Finance chief executive Geoff Cook.

‘The private equity sector has been particular bullish during the past 12 months or so, with the net asset value of funds rising from GBP16bn to GBP22.5bn to June this year, a 41 per cent increase. More generally, Jersey’s reputation as an attractive base in which to hold assets will serve it in good stead during this traumatic period for the financial services industry.’

Richard Thomas, chairman of the Jersey Funds Association, adds: ‘Jersey has earned a reputation over the years for its ability to adapt and tailor its services according to the prevailing markets, and Jersey’s current regulatory regime, with the changes implemented this year, make us one of the most flexible European jurisdictions in the alternative fund sector. There is no doubt that flexibility and innovation will be crucial in maintaining the growth of Jersey’s funds sector in the current global financial climate.’

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