There are a number of compelling reasons why fund managers across the globe are looking to redomicile their funds. Here, fund practitioners in Guernsey give their view as to why they are receiving enquiries about migration...
Martin Scott, Head of Sanne Guernsey
Over the past 12 months, Guernsey has seen a noticeable increase in enquiries from asset managers looking to migrate their fund structures from other jurisdictions. Indeed, here at Sanne, we have received several enquiries from fund managers who either have migrated or are considering redomiciling to Guernsey. Primarily, the interest we have seen has been from blue chip asset managers seeking to move their existing funds and related structures and appeared to be driven by a desire to demonstrate strong compliance with the principle of economic substance, an area which Guernsey has proven itself to be at the forefront of since the introduction of the Income Tax (Substance Requirements) (Implementation) Regulations, 2018.
In addition, the implementation of the Limited Partnerships (Guernsey) (Migrations) Regulations, 2020, has helped to facilitate this interest and made the process an attractive option for those considering it. One our clients who took advantage of the new regulations to migrate an existing structure to Guernsey has subsequently set up further regulated structures here utilising the Guernsey Financial Services Commission's fast-track fund regimes. I firmly believe that this is due to the great service and relationships built between the client and their local service providers, combined with the credibility of Guernsey as a jurisdiction and the effective and pragmatic regulation of the local fund industry.
Stephen Rouxel, Head of Business, HSBC Asset Management (Guernsey)
Fund growth factors: Guernsey, like many fund jurisdictions, is experiencing growth in assets. Much of this growth is a combination of growth in asset values seen across various asset types (particularly private equity), but some of this growth can be traced to a slow but steady trickle of fund re-domiciliation from other established offshore markets.
Fund domiciliation for established evergreen and fixed life fund platforms is always under review by the teams that manufacture them. Re-domiciliation or even a shift of domicile for a new iteration of an existing product range is an expensive project. Any such move is likely to be driven by fund sponsor investor feedback. This feedback can take many different forms depending on the investor type and domicile.
Investor influence: As has been established by countless studies and is now built into EU MIFID legislation, investor needs are a prime force for fund domicile choice. What investors want is often a factor of where the investor is domiciled, political influence and desired target investments, but some constants are global. A solid and politically stable jurisdiction with little to no surprises, be they legal, regulatory or costs is a must when picking a fund jurisdiction. Guernsey is well placed to satisfy all these.
One of the investor-specific points, of growing importance to investors in the EU, is substance. Guernsey was recently assessed as a cooperative jurisdiction by EU finance ministers after working with the EU Code of Conduct Group. This, along with its work with the OECD, puts Guernsey firmly in the tax-compliant camp. Whilst this is not the only point of choice for an EU investor, it is a big one, and one Guernsey is well placed to answer.
For US and Asian investors, important points are typically cost, speed to market and jurisdiction recognition. An over-complex compliance cost will not be a desired outcome but Guernsey, with its pragmatic approach to regulation and quick efficient service, is well placed to service this market.
Rebecca Booth, Client Director, Carey
Increasingly investors are expecting that their funds and investment managers are in a location such as Guernsey with a good reputation, which meets OECD and EU substance requirements. As well as providing a stable geopolitical environment, high governance levels, flexible regulatory regimes and a wealth of knowledge of the sector, Guernsey has for a long time been the location of choice for investors, funds and investment managers.
Guernsey firms can move existing businesses, structures and funds across to the island in a seamless manner whilst understanding other jurisdictional requirements to ensure service is not disrupted.
Investment managers with a global portfolio of funds are choosing Guernsey to migrate away from other financial service locations and Guernsey firms to provide a full suite of administration services to these migrated businesses.
One of our clients, an investment manager who undertook such a move from Cayman to Guernsey, says of their experience with Carey:
"The Carey's team assisted us to move our Cayman Island incorporated manager to Guernsey. From day one the Carey's team was highly professional in their approach and confidently lead us through each step of the process. As questions arose the Carey's team responded promptly and in full. The migration was completed on time, within budget, and without any major issues arising."
Learn more about investment funds in Guernsey at the 2022 Guernsey Funds Forum in London on 12 May.
Read our migrations brochure here.
For more information about Guernsey's finance industry please visit www.weareguernsey.com.
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.