Dr Andy Sloan, Acting Director of Strategy at Guernsey Finance, writes for Funds Europe magazine's 'Association Column' on Guernsey's global distribution capabilities.
It is the Guernsey view that mutual recognition of funds regimes is the future for global distribution and administration. As a global leader in alternative funds servicing, we intend to be at the forefront of the drive to leverage mutual recognition to deliver more cost-effective, capable solutions for global managers.
But against that “future think” backdrop, it is easy to lose sight of today’s basics of meeting the requirements of managers and investors.
From the perspective of our “rock”, it is easy to take for granted the basic building blocks of the scale of the stability and substance of the Guernsey service offer. Attributes that managers are increasingly valuing in uncertain times.
Guernsey has long been recognised as a provider of strength and security in alternative asset administration. That strength has led to dominance in private equity and infrastructure administration and a specialism in alternative asset servicing. That strength and specialism is increasingly being leveraged by service providers catering to the growth in multiple alternative asset strategies across all client types – a trend labelled as a “move to multi alt” by PwC in its recent “Asset Management 2025” publication.
The further trend we see clearly from the perspective of a third country jurisdiction off the coast of northern France is a major pivot by managers seeking to accommodate the more globalised distribution patterns developing in a “pre-post” Brexit environment.
These factors are combining with managers placing increasing value on the strength of Guernsey’s global distribution network – to all four corners of the globe – developed through agreements and equivalences built up over decades of commitment to international engagement and standards. Allied to our proven NPPR route – the faster, cheaper alternative to the passport, reaching the parts of the EU investor base managers need to reach – this creates a powerful distribution node to London, EU27 and the rest of the world for managers as Brexit catalyses reviews of their distribution needs.
More than two-thirds of Guernsey alternative funds comprise investors from two or more regions globally, and it is here, pivoting to rest of world distribution, where we see a “super trend” developing pre-post Brexit. This trend particularly is leading to a greater appreciation of the supportive role the Channel Islands play to London-based managers, part of our symbiotic relationship with the city.
Right now, managers are being resolute in their focus on stability and substance. Increasingly sophisticated service, flexible, competitive product, and four corners of the globe distribution is now the de minimis offer.
The Guernsey Funds Masterclass in London in February saw panellists outline how they felt concerns over costs and regulation of UCITS in Europe were driving managers to consider setting up duplicate structures outside of Europe.
Some managers now are seeing clients in Asia, Australia, Switzerland and the US considering options other than UCITS, which was not happening just a few years ago.
A convergence of these secular trends is driving a movement towards global passporting, or at least a global template based on mutual recognition to draw together the numerous regional passport initiatives and drive efficiency and lower costs. Brexit is likely to accelerate that journey, and Guernsey’s distribution ability sees the island well-placed.