In this guest post Thalius Hecksher, Global Director at Trident Fund Services, discusses the drivers behind the trend for bigger funds and fewer start-ups, and why Cayman remains the largest and most popular offshore fund domicile.
When it comes to the Cayman Islands, blue skies, beautiful beaches, scuba diving, and snorkeling are the norm, and have been for decades. But when it comes to offshore fund administration there are some interesting changes afoot in Cayman. In a pronounced sea change Cayman start-up funds are getting bigger, while on the flip side, small start-ups, while not quite an endangered species, are certainly rarer. With regulatory costs creeping up in recent years, partly as a result of the implementation of new initiatives such as FATCA, it looks like this trend is here to stay.
Seminar examines past, present and future of BVI funds on Back to the Future Day
Ollie and I just wrapped up a very interesting presentation today to a cross-section of the BVI funds industry.
We chose 21 October 2015 because it is Back to the Future Day – the day that Marty McFly travelled back to the future in in the eponymous film — and we decided to capitalise on this date by looking at the past, present and future of the funds industry. This meant a lot of discussion of the global financial crisis as well as a look ahead at the future areas of growth for the BVI funds industry.
One point which came out quite clearly from the discussion is the BVI’s growing profile as the offshore jurisdiction of choice for the emerging fund manager. We are seeing a great deal of polarisation within the funds industry – recent data suggest that 11% of active fund managers account for over 90% of total assets under management – as well as increasing fee and regulatory pressure on fund managers. This translates into a challenging road for start-up managers and this is the precise market sector which BVI had in mind when it created its new incubator and approved funds. Both of these products are designed to help different types of start-up managers get off the ground with minimal red tape and build a track record at the same time.
If you want to de-register a BVI fund by cancelling its certificate of recognition, the chances are things haven’t gone as planned. Perhaps the launch was not a success and the fund never traded, perhaps the launch went well but performance was poor and you are winding up. Or maybe things are more positive, you have just realised that you could operate as a closed-end fund and it makes financial sense to de-register or you think you would be better off domiciled in another jurisdiction. Whatever the reason, don’t be down. In the words of Henry Ford, “Failure is only the opportunity to more intelligently begin again”. The good news is, de-registering is pretty easy so we can save you a headache!