Guernsey's fund industry began the year with more than £100bn in assets under management and administration. This follows impressive growth of £26.4bn, or 35.9 per cent, in 2005. This record level has been assisted by positive market conditions and increased flexibility in the regulation and licensing of funds, which have encouraged strong growth in the number of hedge funds, private equity and property funds requiring administrative, custodial and management services within the island.
Guernsey-domiciled open-ended funds grew by £14.5bn (43.1 per cent) during the year to reach a new record total of £48.2bn. Closed-end funds also showed signs of resurgence, with an increase of £8.2bn (36.0 per cent) during the year to reach £31.1bn, also a new record. Non-Guernsey schemes, for which some aspect of management or administration is carried out in the Bailiwick,increased by £3.6bn (21.5 per cent) during the year to a record £20.7bn.
These figures represent unprecedented growth in the industry and a testament to Guernsey's success as a global fund services provider. The island's ability to perform in a highly competitive market and stay ahead of the demands of the industry is set to be reflected in a steady rate of growth in the current and future years.
By the end of the year, 36 Qualifying Investor Funds (QIF) had been approved in Guernsey since the launch of the scheme on February 7, 2005. Coupled with other enhancements to the legal and regulatory environment, QIFs have put Guernsey at the forefront of the international investment funds industry as its professional infrastructure and pragmatic new regime have together encouraged significant new business.
A significant amendment to the QIF regime recently took place, defining 'Qualified Investors' as individual persons who make a subscription of USD100,000 or more in the fund, thus enabling them to benefit from the fast-track, self-certified QIF regime. Guernsey has long been a choice location for leading fund promoters, managers, administrators and custodians whose professionalism interconnects with an indepth infrastructure of fund service providers, including lawyers and accountants. Over the years this expertise has made it an attractive domicile for a range of alternative products including hedge funds, funds of funds, property funds, emerging market funds, traditional funds and private equity.
Guernsey's commitment to remaining in the forefront of the industry means there are regular opportunities for the Guernsey Financial Services Commission to meet with agencies such as Guernsey Finance and the Guernsey International Business Association to discuss where improvements can be made. Once a regime has been put in place, it continues to evolve organically with the industry in constant communication with the regulator. The Commission recently updated the QIF regime with the aim of maintaining its competitiveness in the international marketplace and its ability to attract international fund managers. The Guernsey International Business Association continues to push for further flexibility to develop new innovative products in order to ensure that the island retains its allure as a leading funds domicile.
However, the island is also ambitious to develop its position as a centre for the servicing of sophisticated funds wherever they may be domiciled. There are many factors that contribute to a fund manager's decision on where to domicile a fund and which service providers to use.
Guernsey's flexible approach means that where a manager has decided to domicile a fund elsewhere, providers work closely with that jurisdiction to ensure all aspects of corporate governance are monitored. This helps Guernsey service international investment managers who by the nature of their client base offer products domiciled in multiple jurisdictions.
By Robin Fuller and Kate Stallard Robin Fuller is managing director and Kate Stallard is director of sales with HSBC Securities Services (Guernsey)