Ability to support managers in different growth stages
Currently, there are 101 Approved Investment Managers licensed in the BVI, based on figures published by the Islands' financial regulator, the BVI Financial Services Commission (as of 30 September 2015).
Factor in that the BVI now has two new fund products (the BVI Incubator Fund and BVI Approved Fund) and these are positive times.
"It's exciting to be able to provide something new to clients. It shows that the jurisdiction is working to support fund managers in different ways," says Mara Spencer (pictured), Managing Director of ACE Fund Services, an independent BVI fund administrator. "The Approved and Incubator funds had long been talked about. That they have now come into effect represents a steady move forward."
In many respects, it follows the approach that ACE Fund Services has to business. When the firm was established it understood that not all funds are equal; different stages of funds need to be taken into account, which have different requirements as managers become more established and build their AUM.
"From day one we acknowledged that the first two years after launching a fund are the most challenging. Our fees and support package are always reflective of this fact, the idea being that over the long term, if a fund does well it will increases its assets, the number of investors, and become a stable business.
"Establishing that relationship early on, and setting the costs accordingly, ends up becoming mutually beneficial to both parties. With the introduction of the incubator and approved fund, the FSC is likewise acknowledging that there are different fund stages and objectives that need to be met with different fund structures," explains Spencer.
Spencer observes that managers of all shapes and sizes now have a wider menu of solutions to potentially choose from; a critical feature for any competitive fund jurisdiction.
"Historically, we have had managers come to us and say that they are trying to get an incubator fund with a closed portfolio to offer to friends and family, the idea being that after building a track record they would then look to offer the strategy to external investors using a BVI private, professional, public fund or SPC. Up until last year, that option didn't exist. As an administrator, it is advantageous to say to clients that they have different options available.
"In particular, it helps to support start-up managers who need to maintain costs and build a track record. The incubator fund also has a simplified licensing process and a fast-track time to market," says Spencer.
Not that an incubator fund is for everyone. For the first two years it does not require any appointed representatives (administrator, custodian, manager, auditor) but thereafter it must convert to a BVI approved fund or a recognised or registered fund.
"We have funds that have been with us since day one and have since gone on to expand offering investment into different portfolios by using multiple share classes and SPCs. The incubator and approved funds will work for some, but not all, managers.
"We envisage there will continue to be demand for our turnkey solution. It will remain part of our overall solution set. The incubator and approved funds are welcome additions to that solution set," concludes Spencer