“The message needs to be
clearly made that what
Cayman offers in terms of
fund establishment has not
changed.” Richard Spencer
Heather Smith: There were 10,586 regulated funds as at the end of
December 2016 compared to 10,940 in December 2015.
It is not fund formations that are creating the drag on the numbers,
it’s more the rate of the de-registrations. Globally that tends to be
the trend we’re seeing with funds closing more quickly where the
desired returns are not achieved.
Other jurisdictions are also reporting lower overall numbers and
Cayman holds its position as the number one domicile. Despite the
overall decrease in fund numbers, assets under management for
Cayman funds have gone up. There has been growth in total assets for
Cayman regulated funds of 1.8 percent as reflected in the $3.5 trillion
net asset value reported in the 2015 Investments Statistical Digest.
Jude Scott: We’re very fortunate—we continue to be one of the
premier global financial hubs and in addition to hedge funds, PE and
other alternatives are finding Cayman attractive.
We still see Cayman playing a leadership role with a flight to quality
coming into Cayman because of its advantages and strong regulatory
regime. Whereas perhaps in the past we lost some business because
of cost, people are increasingly recognising the differentiation in the
quality in the jurisdiction here and they want to be part of that.
We’re also gaining more traction in multiple sectors, such as
reinsurance and insurance. Just in January we announced
CAYMAN FUNDS | 2017
reinsurance as a formal sector for Cayman. We also have our capital
markets and trusts sectors.
We’re also uniquely placed to help countries address some very
important issues including Brexit. The UK and the city of London are
feeling under threat and our message is that we’re a strong partner
of the UK in many ways. We’re in a position to provide significant
inward investment and liquidity into the UK economy during these
uncertain times.
Jennifer Collins: The flight of quality to Cayman is interesting. I was
working with a fund recently that transferred its domicile to Cayman
from another jurisdiction precisely for that reason. Now that they
have transferred they talk about the engagement of the directors
here, the ease of dealing with the regulator and the acceptance of
the jurisdiction in institutional investment meetings. Quality like that
speaks for itself.
Colin MacKay: AIMA conducted a survey last year of the
management community and the results echo everything Baron
said. It also reflects the challenges of performance, seeking returns
and how to differentiate from other products that are out there.
From the investor perspective, some seemed very keen for shortterm
growth but they were prepared to accept higher volatility. The
institutional pension funds are looking for steady return over the
longer term. The focus for those investors was around the medium
to long term, rather than short-term return.
The sub topics that came out of the survey were spend ratios and
fee structures. Everybody is prepared to be creative on fees now,
especially if the ticket is large enough.
The investment managers are looking optimistically at Brexit and at
the Trump impact as perhaps they will increase volatility.
Certain economists seem to be suggesting we are overdue a
recession, and that will bring with it increased opportunity to pursue
a return but on the downside. That’s attractive to managers.