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Guernsey fund industry grows by 45 per cent, says Lipper

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Guernsey’s fund servicing industry grew by 45 per cent over the 12 months to the end of June to reach USD275.4bn (GBP137.1bn) in net assets under administration, according to the latest Gu

Guernsey’s fund servicing industry grew by 45 per cent over the 12 months to the end of June to reach USD275.4bn (GBP137.1bn) in net assets under administration, according to the latest Guernsey Fund Encyclopaedia published by Lipper. In June 2006 the total was USD189.8bn (GBP102.6bn), itself a 32 per cent increase from 2005.

The 13th annual edition of the reference work, first launched by Fitzrovia, provides details of the market share for lawyers, auditors, custodians, administrators and fund promoters. The series also includes similar analyses of the fund industry in Jersey, Ireland and Luxembourg.

‘While these figures vary from the statistics provided by the Guernsey Financial Services Commission, the research provides further evidence that for introducers of funds business, Guernsey’s first class infrastructure and wealth of expertise continue to make it the jurisdiction of choice,’ says Mike de Haaff, chairman of the Guernsey Investment Funds Association.

‘In doing so, they also reflect the high numbers of enquiries that the island’s funds professionals are experiencing on a day-to-day basis. We are always very much aware of the level of demand for our products and services and as such continually develop our infrastructure so that there is the capacity for Guernsey’s funds industry to remain a growth business into the future.’

Northern Trust is the largest administrator by total net assets of both domiciled and non-domiciled funds with USD56.8bn, ahead of Apax Partners with USD27.6bn), followed closely by HSBC Security Services, Royal Bank of Canada and Mourant.

Northern Trust, which acquired Baring Asset Management’s Guernsey International Fund Managers business in November 2004, also leads in terms of assets under custody with USD26.3bn, ahead of Royal Bank of Canada’s USD20bn, with International Private Equity Services, Credit Suisse and Kleinwort Benson rounding out the top five.

Among professional firms, Carey Olsen now offers legal advice to 794 funds, followed by Ozannes in second place with 546 and Ogier with 156. KPMG is the largest auditor of Guernsey-serviced funds, auditing 435 funds, just ahead of PricewaterhouseCoopers (430), with Ernst & Young on 219, Deloitte & Touche with 164 and PKF with 115.

‘Again this analysis demonstrates Guernsey’s ability to thrive in an evolving financial marketplace,’ says Ed Moisson, director of European fiduciary operations at Lipper. ‘Alternative investments in particular seem to have found a home here.’

Private equity and venture capital funds account for the lion’s share of alternative funds domiciled in Guernsey with assets of USD86.5bn, followed by funds of hedge funds (USD32.4bn) and real estate funds (USD31bn).

‘These figures are good news for the island’s funds sector and further reinforce the fact that it is a booming part of our financial services business,’ says Peter Niven, chief executive of GuernseyFinance, the promotional agency for the island’s finance industry. ‘They do, of course, mark a period prior to the recent turbulence in the markets, but we know Guernsey’s funds industry is well placed and ready for the challenges moving into 2008.’

Graham Hall, a corporate partner with Carey Olsen in Guernsey, says: ‘The figures show that an increasing number of institutions see considerable benefit in having their funds domiciled in the island. There are now some 1,600 funds serviced in Guernsey, and Carey Olsen has advised on 794 of these. Naturally we’re delighted to have consolidated our position as the advisor of choice on funds domiciled in Guernsey.

‘Of the 764 Guernsey-domiciled funds we’ve advised on, 157 were new instructions during the 12 months to the end of June, which illustrates how busy our teams have been. As a direct result we have taken on nine additional corporate lawyers over the last 12 months with several more due to join us in the near future. We expect that this growth will continue and the outlook for the industry in Guernsey is very positive indeed.’ The 764 Guernsey-domiciled funds on which Carey Olsen has advised represent assets of more than USD124bn.

KPMG partner Neale Jehan says: ‘KPMG is delighted to again be named the number one auditor of funds in Guernsey. We have spent significant effort ensuring that we have the capacity and capability to continue to service new and existing clients in a rapidly growing market. We are extremely proud that the Lipper Fund Encyclopaedia shows that we audit nearly half of the fund assets under management in the island.’

Vic Holmes, chief executive of Northern Trust’s Channel Islands operation, says: ‘These positive growth figures for Guernsey illustrate just how successful the local funds industry has been at innovating and evolving its funds environment to meet the dynamic asset servicing needs of the international financial community.

‘At Northern Trust we are delighted to be independently recognised by Lipper as the largest service provider for the administration and custody of investment funds. Our ability to combine flexible solutions for a wide variety of investment classes, with our global technology and processing strength, has helped us grow significantly over the past 12 months.’

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