“We’ll have a better idea
of what’s happening in the
multinational space once
country-by-country notification
and reporting commences.”
Michelle Bahadur
We see the market as very fluid, but Cayman remains dominant and
a lot of that has been led by the good work of government, CIMA and
industry. There has been some good innovation through things such
as LLC and exempted limited partnership legislation.
Colin MacKay: If you look at the volatility index for the US market
in particular, over the last two years, it’s not quite flat-lined but its
movements have been very modest. Certainly, in 2016/2017, there
was very little volatility in the market.
Our membership in the alternative asset management community
has had to look at how to achieve asset growth, through longer term
performance. That’s why some have turned to private equity style
strategies. Investors are willing to lock in capital for longer periods in
return for improved returns and there’s definitely been a strong uptake
in the private equity structuring.
Jude is correct, Cayman is very well positioned as the domicile of
choice for private equity, every bit as much as it is for hedge funds.
There has been greater volatility recently and maybe that will prompt
an increase in new fund launches as that creates opportunity for gain.
We could see some opportunity for new managers and new products.
That brings new exposure to the jurisdiction which is important for us
going forward.
4 CAYMAN FUNDS | 2018
From an asset management community perspective, 2017 was a
very strong year, and the start of 2018 bodes well.
Calleja: In our 11th annual hedge fund survey in November last year,
and our recent private equity survey one of the common themes was
changing investor preferences. There’s a shift to investors wanting
more customised terms and conditions, whether that’s liquidity or
exposure to new asset classes.
Ultimately, the vehicle of choice is still a Cayman product from a
jurisdictional perspective.
Other challenges and shifts that we see are continued pressure on
fees; managers continue to see their operating expense ratio come
down and it’s not as a result of management fees being cut, rather it
is through operational efficiencies. We’re seeing more robotic process
automation, not just in the front office, but across the board at service
providers as well.
The biggest threat to the industry, besides investor preferences,
is sourcing and retaining talent. We’ve seen a lot of investment
managers introduce HR programmes. The other big topic is
more disruption and opportunities and challenges as a result of
technological innovation. Some of that innovation is resulting in
operational efficiencies but it is also disrupting our product. As an
industry we need to be nimble and understand what changes may
result in our product going forward.
How has the landscape changed for
new launches and new managers?
MacKay: My sense is in the last three years what we’ve seen
is capital aggregation for larger managers. We’ve seen a lot of the
managers coming forward with new products, but within the stable
of the large investment management houses. We have not seen as
many new manager launches. In 2016, only 80 new managers that
launched new products in Cayman were not previously managers of
Cayman products.