Speakers on the fund distribution panel at this year’s Guernsey Funds Forum outlined the main attributes that companies look for when choosing a domicile for their fund, and explained why Guernsey often comes out on top.
“Political and regulatory structures are important,” one panellist said. In order to maintain investor confidence, companies look for domiciles with strong reputations and a clean record when it comes to problematic lists, they explained. Even if a jurisdiction has been removed from, for example, an anti-money laundering watchlist, investors may be wary of its stability.
The speaker added that the capacity to grow and not be limited to highly specialised fund types is something that domiciles should aim towards, as is, of course, a good regulatory regime.
Panellists agreed that Guernsey’s regulatory regime is strong, with another panellist calling the domicile an “enabling environment” conducive to setting up funds, establishing structures and finding “workable, positive solutions” to problems that may arise.
The island also benefits from being outside of the EU, one speaker suggested. They opined that find domiciles in the EU are often more stringent in their regulatory operations so as to avoid accusations of being too ‘light touch’. Guernsey’s regulation offers an alternative to both EU and, another panellist added, UK arbitrage.
Panellists agreed that reputation plays a major role when firms are making domicile choices. “Familiarity is very important,” they said, explaining that if investors are familiar with a domicile and its structures then they are more likely to participate in a fund. The reputation of a domicile is vital when raising capital, she went on to say, serving to reassure investors and build trust.
As such, considering the target investor is essential when choosing a domicile; depending on their geographical location, different domiciles will be considered reliable and familiar. Gaining a strong positive reputation both within and external to their region is what domiciles aim for, one panellist added — their structures are already understood without the need for time-consuming explanations.
Closing the conference, Rupert Pleasant, chief executive of Guernsey Finance, said: “Guernsey’s reputation, its position as a premier jurisdiction for innovation and as a place to collaborate and do business has been reinforced by all of our speakers and endorsed by attendees.”
Image: Guernsey Funds Forum 