Guernsey: The Cutting Edge

Last Updated: 4 June 2007
Article by Peter Niven

Most Read Contributor in Guernsey, September 2018

This article was originally published in HFM Week Guernsey Supplement, May 2007.

Guernsey’s investment fund industry is booming. The substantial growth that was a feature of 2005 continued throughout 2006, pushing levels of business to record highs and this has largely been driven by a surge in alternative asset classes, including hedge funds.

The Island is now very well known as an administrative centre but the depth of expertise, strong corporate governance, convenient location and fast-track consent process for funds targeting experienced investors have made Guernsey increasingly popular with promoters and managers seeking a base for their funds and in particular alternatives.

Notwithstanding these huge flows of business, work is ongoing to further enhance Guernsey’s funds environment. For example, in February this year the Island introduced a new streamlined consent process for registered closed-ended funds that will be particularly attractive to promoters and sponsors looking for a hedge fund domicile. Guernsey is by no means resting on its laurels.

Booming Funds Industry

Figures from the Island’s regulator, the Guernsey Financial Services Commission (GFSC), show that:

  • The value of funds under management and administration in Guernsey increased by £30.2bn (30.2%) in 2006 to end the year with a new record high of £130.2bn.

A breakdown reveals that:

  • Guernsey domiciled open-ended funds grew by £8.4bn (17.5%) during the year to finish 2006 at £56.6bn.
  • Guernsey domiciled closed-ended funds rose by £17.4bn (55.8%) over the 12 months to reach £48.5bn at the end of the year.
  • This took the combined value of these funds past the £100bn mark for the first time – reaching £105.1bn.
  • Non-Guernsey schemes, for which some aspect of management or administration is carried out in the Island, rose in value by £4.4bn (21.2%) to reach £25.1bn at the end of 2006.

Fund approvals also ran at record levels during 2006:

  • There were 48 new open-ended funds and 127 new closed-ended funds, making a combined 175 – 62 more than in the previous 12 months.
  • Of these, 51 were Qualified Investor Funds (QIFs), which is the fast-track consent process for funds targeting experienced investors that was introduced early in 2005 and through which 27 funds were established that year.

Market conditions have undoubtedly played a part but primarily it indicates how Guernsey is being viewed as a jurisdiction of choice for alternatives. Indeed, while traditional funds remain well represented in these increased business flows, it is the popularity of alternatives such as hedge funds, private equity, property and more esoteric asset classes such as timber, wine and fine art that have played a major part in this growth.

Hedge Fund-Friendly Environment

Guernsey has a funds industry where nearly four decades of experience in providing investment products and services has helped establish a sector with a substantial depth of expertise, making the Island a particularly attractive location for the administration of funds and especially alternatives such as hedge funds. This expertise, coupled with strong corporate governance, a convenient location and a fast-track consent capability for funds targeting experienced investors, is also making the jurisdiction increasingly popular for the domiciling of alternatives.

Today, there are more than 45 administrators in the Island, with a significant number specialising in alternative funds. The majority of the funds that they service are Guernsey open and closed-ended funds, which are now promoted and sponsored by leading institutions in 45 countries. These funds can be established through a range of flexible investment vehicles such as unit trusts, PCCs, ICCs and limited partnerships, which the administrators are skilled at using.

Guernsey’s administrative heritage is increasingly being complemented not just by the availability of custody services but also fund managers and in particular those specialising in hedge funds, ranging from larger organisations like Financial Risk Management (FRM) to more boutique operators such as BBBSA Strategic Management Limited.

The fact that the Island has a broad-based financial services industry means that there are on-island banking, fiduciary and insurance providers, legal advisers, auditing and tax advisers, stockbrokers, together with the Channel Islands Stock Exchange (CISX).

Guernsey also boasts a large pool of experienced and qualified non-executive directors. There are no direct rules on the make-up of the board for funds domiciled in the Island but it makes practical sense that the majority of directors would be located locally. Taking this approach also helps provide clear delineation between the onshore investment management and the offshore overall management and control of the company. Finding the required personnel is made easy in Guernsey, which as a result has rightly acquired a reputation for strong corporate governance.

Domiciling (and for that matter administering) a fund in Guernsey, particularly for investment managers in the UK, is also made easier by the Island’s convenient location. Situated between Europe and UK it is in a time zone that allows business to be conducted with both the US and the Far East during the same day. Travelling to the Island is quick and easy as there are frequent air and sea links to both Europe and the UK, with flights from London taking less than an hour. In addition, an extensive array and high volume of business can be carried out face-to-face and in a short amount of time because of the close proximity of key institutions and businesses on the Island. Guernsey is therefore an ideal one-stop shop for funds.

Simpler And Quicker

Guernsey cemented its position at the forefront of the international fund and in particular alternatives industry when in it introduced QIFs early in 2005. This self-certification regime, which enables short authorisation times for funds targeting experienced investors, has become increasingly popular.

With a thriving funds industry it might be easy for the Island to be complacent. However, industry, the regulator and government established a working party led by leading Guernsey advocate Peter Harwood to undertake a root and branch review of investment funds sector legislation and regulation. The Harwood Report, as it was christened, made a number of recommendations, including the creation of a ‘registered’ funds route where the focus of regulation would be on the licensed Guernsey administrator rather than the individual investment funds as products.

A registered regime was introduced for closed-ended funds from 1 February 2007. Taking this avenue means that the GFSC will grant the required fund consent within three working days if the Guernsey licensed administrator can show that it has carried out sufficient due diligence to be satisfied that the promoter and associated parties are fit and proper. This is a development of the approach taken by the Commission in respect of QIFs. The remainder of the proposals from the Harwood Report will be implemented when legislation is enacted later in 2007.

The Right Conclusion

Guernsey’s fund industry is flourishing, with alternative asset classes such as hedge funds playing a significant part. Renowned as an administrative centre, the Island’s substantial depth of expertise, strong corporate governance, convenient location and fast-track consent process for funds targeting experienced investors has made it increasingly popular for the domiciling of alternatives such as hedge funds. The Island’s progressive attitude also ensures that developments such as the registered funds regime keep it at the cutting edge of the international fund industry.

For more information about Guernsey's finance industry please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions