BVI shaping up to compete with the Cayman Islands

The Cayman Islands may offer sleek Ferrari style products but the BVI has packed on some muscle recently and, like the Mustang GT in this YouTube clip, is giving Cayman some competition.

Philip Graham comments on Thalius Hecksher's recent guest blog and explains why he thinks the British Virgin Islands is like a Mustang GT. 

It was with great excitement in the blog headquarters (think Dr Evil’s underground lair with far more lawyers and far less sharks with laser beams on their heads) that we posted our first guest blog this week that was written by Thalius Hecksher of Trident Fund Services. I would hope you agree that Thalius demonstrates some tremendous insight regarding the trends in the global funds industry right now and we very much thank him for taking the time to set it out so clearly and concisely.

He makes a number of fascinating points, but the key stand out for us in the BVI office was the statement that “Cayman is definitely still number one, but BVI is in its rear view mirror.

Clearly, there was no precise estimate of just how far behind on the freeway the BVI might be, but it is great to see that because of the lower price point and regulatory flexibility of the new fund vehicles in the BVI, despite having only been around for just over a quarter of a year, they are already generating some serious traction in the marketplace.

Our team in Cayman is frantically busy right now and has been for quite some time. Fortunately (for those that believe, like the great Jon Bon Jovi, that they will be able to sleep when they are dead), our BVI team is also experiencing one of its busiest years since the heady days of 2008 before Lehman toppled and brought a dramatic halt to the regular and constant fund launches we were rolling out on a monthly basis.

We undoubtedly believe that one of the primary drivers for this is the fact that there is a very genuine opportunity for emerging managers in the alternatives space right now, as Thalius sagely pointed out. The recent lackluster performance of hedge funds in general has meant that investors are looking for more interesting and entrepreneurial start-up funds which, whilst undoubtedly riskier, have the potential to produce a much greater return. For this reason, we’re likely to see a wave of smaller managers entering the market to capture this opportunity and for those that wish to attract foreign or US non-taxable investors, the BVI should be the rightful home of any emerging manager wishing to demonstrate to their investors that they have taken every opportunity to prudently minimise the start-up costs involved.

It should be pointed out that despite the current focus on the emerging manager in the BVI to whom the new fund products are aimed, we do also have our fair share of the some of the largest asset managers in the world and proudly continue to work with them to develop their structures to ensure they meet the daily (sometimes hourly) demands of their investor base. Having said that, Thalius is absolutely right that, as a general rule, Cayman has become and looks set to remain the first choice for the giants of the funds industry and on that basis I very proudly watch our Cayman funds team continue to grow, develop and get the recognition they so richly deserve. As they would undoubtedly tell me, once funds reach a certain size, they can easily absorb the higher fee levels charged in Cayman which for them, and the underlying investors, is a mere drop in the turquoise blue ocean. Therefore, the race down the hedge funds freeway between jurisdictions remains and whilst Cayman invites managers with its sleek Ferrari styled offerings, the BVI has been to the gym this year, packed on some muscle and is moving along very nicely like a Ford Mustang GT.

Finally, whilst casually browsing Twitter (I am still desperately trying to cling onto my youth) I noticed this fantastic feature from Aberdeen Asset Management, which is narrated by the absolutely fabulous Joanna Lumley. Enjoy!

Philip Graham
Philip is a partner and expert on offshore funds at Harneys who puts his ever increasing grey hairs down to three young children, supporting Liverpool Football Club, and being married. In no particular order.

One comment

  1. Good article on the reinvigoration of the BVI funds industry as well as the industry in general. We even have incubators looking for auditors and other governance providers before launch, demonstrating healthy ambition for the product and its users. The BVI is clearly intent on competing with Cayman as well as being the clear alternative for offshore funds.

    Noticing a couple of law firm openings in Bermuda, is it that Cayman is the Audi (did it get a slight head start and offer renowned performance and reliability?), BVI the Ferrari (very respectable and nimble) and Bermuda the Mustang? Or is Bermuda’s main focus still in a different event (insurance)?

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