Asset managers and intermediaries are increasingly thinking of splitting global and EU distribution if it can lead to improved levels of service.
They are among the interim results of a survey carried out by Guernsey Finance, the promotional body for the financial services industry in the island, at SuperReturn International in Berlin.
More than half of firms surveyed are considering reviewing their distribution and structuring of investment funds in the next 12 months as they sought better service and looked to cut costs. Some three-quarters had reviewed their distribution arrangement in the previous two years.
Market access remains a key priority for them. Managers are starting to recognise Guernsey’s credentials in global distribution—proven routes to market for institutional investors to more than 50 jurisdictions, across five continents, including the US and China.
But standards of service are a factor of growing concern. More than half of managers say that they consider service levels to be extremely important, and that may influence a change of jurisdiction.
And the survey also showed that more than half of managers would consider operating parallel structures for global and EU distribution if it led to improved service and reduced costs. Costs are, in part, being driven by technological advances but also the ever-growing EU regulatory burden. More than a third said this issue was a significant concern to them.
Guernsey is ideally placed to offer access to worldwide markets, greater certainty for managers and promoters, and more cost-effective solutions with higher levels of service than many of our competitor jurisdictions.
Guernsey funds are able to reach investors in jurisdictions representing more than 80 percent of the world economy—more than 50 jurisdictions across five continents, including the US and China.
The island can provide asset managers with a single route to investors, and our ‘four corners of the globe’ distribution model—proven, smarter and faster from Guernsey—needs to be more widely recognised.
And our European distribution is through National Private Placement Regimes (NPPR), which provide a proven, smarter, faster and cheaper route to access European investors.
Many promoters think that they need to have a UCITS or an alternative investment fund (AIF) but, when they analyse who their target market is, and what they require from their fund, a Guernsey vehicle very often turns out to be a better regulatory fit, and offers a cheaper, faster solution.
The European Commission’s own figures, from just a year ago, show that 70 percent of all EU funds, are registered for sale in just one member state, and only 37 percent of UCITS and just 3 percent of AIFs are sold in more than three member states. These figures expose the UCITS ‘myth’, that UCITS is the only real option for fund structures sold in Europe, and prove that the Alternative Investment Fund Managers Directive (AIFMD) passport is not all it is promoted as.
NPPR has been successfully used many times for marketing into Europe and is well understood as a path for managers and promoters for distribution, supported by Guernsey-based service providers. It is an effective alternative, particularly for those with a targeted list of marketing jurisdictions.
Guernsey provides quick, effective NPPR access to more than 70 percent of the nominal GDP across continental Europe. The island is also positioning itself as the stable alternative through Brexit, playing on a 50-year heritage of acting as a conduit for inward investment into the UK and Europe—ideally placed as a jurisdiction to provide certainty to managers, promoters and placing agents.
The full survey will be published at the Guernsey Funds Forum on Thursday 16 May.
