The Isle of Man's profile as an international centre of excellence for blue chip specialist funds has risen further with the attraction of more leading players in the industry to base their latest market offerings on the Island.
Prime Rate Capital Management LLP was established by Chris Oulton and three other founding partners as a joint venture with the City's Matrix Group. It was formed to become the first independent, specialist provider of AAA-rated liquidity funds – known as qualifying money market funds – serving the corporate, institutional and intermediary market.
One of its first funds launched in April this year, the Prime Rate Cash Management Fund (Isle of Man) Plc, was granted AAA rating by Standard & Poor's and has already amassed assets of over £150 million.
Offshore feeder fund
The specialist Isle of Man vehicle acts as a feeder fund for the company's master UK sterling liquidity fund, the only FSA-authorised money market fund, which is benchmarked against the seven-day rolling LIBID. Its attractions include a very low annual management charge and the option to deal directly or via the offshore route, depending on the investor's needs.
Launched only in March, the already highly successful onshore fund has been rated AAAm by Standard and Poor's and AAA V1+ by Fitch. Since its inception, the master fund has achieved a yield consistently above both 7-day LIBID and the Bank of England Base Rate. There is daily liquidity and access to the fund.
Prime Rate's legal advisor in the Isle of Man is local law firm, Simcocks, which is fast gaining a reputation in the City for its work in this expanding area of the market: 'We have been impressed by the efficiency and responsiveness of Simcocks and delighted to be able to provide investors with a feeder fund that invests directly into the only UK FSA-authorised, AAA- rated liquidity fund, offering attractive rates of return and same day liquidity,' said CEO Chris Oulton.
Rapidly growing market
The rapidly growing market in 'QMMFs' has grown from $1 billion to $650 billion over the past decade, and is set to grow further as recent changes in capital requirements and regulation have expanded the universe of investors to include all banks and additional categories of financial intermediary.
Prime Rate says the recent credit and liquidity crunch has focussed investors' minds on the need for secure, diversified and transparent cash investments that provide an attractive yield. QMMFs fit this description perfectly, and have become a money market instrument in their own right. The concentration of experience in the management team means that it is uniquely placed to respond to the convergence between banking and asset management that liquidity funds represent.
The first AAA-rated liquidity fund to be domiciled in the UK, Prime Rate believes that with banking and regulatory changes taking place, an on-shore fund will be convenient and appropriate to a number of institutions, especially financial intermediaries. Additionally, the Isle of Man feeder fund provides the means whereby investors have the offshore facility of accessing an FSA-authorised fund.
'Quick and efficient'
Founder member and Head of Sales, Henry Buckmaster, joined Prime Rate from Investec, where he was Head of UK Institutional Liquidity Sales and a director of its AAA-rated fund. He said: 'It was important for us to have as wide a range of accessibility to our UK master fund as possible. Working with the Isle of Man authorities to achieve a quick and efficient structure, bringing the benefits of this fund to potential Isle of Man investors, was a priority.
'At all stages of the development and subsequent launch of our Specialist Fund, we were provided with enormous help and enthusiasm by all the relevant departments and regulators, which made the process of delivery so much easier and swift,' he added. 'We hope to work closely with a number of institutions and intermediaries on the Island to provide a flexible product that addresses current concerns over credit and liquidity.'
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