Whereas 2016 brought controversy and uncertainty, 2017 promises to be a much more positive year, especially from the perspective of the investment funds industry in the Channel Islands.
Statistics from 2016 show 12.3% growth in the net asset value of funds under management and administration in Guernsey. These numbers are encouraging and serve as a starting point for the year to come. In addition, there are specific reasons to believe that 2017 will build on that base.
The first is the pressure that fund managers and underlying investors are putting on service providers to reduce fees. This is good news for the islands – the lower the overheads and costs in the Channel Islands compared to city firms, the likelier it is that the islands will remain a cheaper option.
Over the past 12 months, the global investment funds industry has seen a noticeable price squeeze from clients, a positive shift for local providers, as where structures can be set up in Guernsey instead of London, operational and overhead costs will be lower and savings can be passed back to clients.
In addition, the launch of the new manager-led product and private investment fund regimes – the manager-led product was launched in Guernsey in 2016 – demonstrates that the islands' legislatures and regulators are not standing still when new opportunities arise.
Both developments may help to streamline the establishment of investment fund vehicles, while keeping costs down and adopting a risk-based approach to investor protection and regulation.
The manager-led product and private investment fund developments are just two examples of the ways in which the investment funds space is changing in terms of innovation and regulation. Further, the pace of change is changing the role of lawyers – in particular, those in the investment funds industry.
The backdrop of regulatory change means that lawyers are being asked to provide advice that runs not just cradle-to-grave, but also with an international perspective. In a practical sense, clients are looking not just for help establishing vehicles and legal advice, but also business advice and input on structuring. Increasingly, they are looking for commentary on what is happening in different jurisdictions.
While a great deal of the focus has fallen on the uncertainty surrounding the Organisation for Economic Cooperation and Development's Base Erosion and Profit Shifting project and Brexit, there are still many reasons why the prospects of the next 12 months are promising.
For further information on this topic please contact Craig Cordle at Ogier by telephone (+44 1481 721 672) or email ([email protected]). The Ogier website can be accessed at www.ogier.com.
An earlier version of this update was first published in Connect magazine.