Paul Smith, chairman of the Guernsey Investment Fund Association, says that after another successful year in 2017, 2018 is shaping up to be a year of great potential for Guernsey funds sector.
As statistics for Guernsey’s funds sector for 2017 are confirmed with a positive 5.6% growth over the year, I am sensing a positive mood in the Guernsey industry for 2018.
In challenging times for financial services, as an industry we have continued to experience steady growth over the past three years now.
The statistics reinforce our view that Guernsey is a strong and stable location to develop international fund business, and demonstrate that Guernsey is still ‘up there’ as a leading global funds jurisdiction.
Net asset values across the sector increased by £14.4bn over the year, with net growth in all Guernsey funds. Open-ended funds were up 2.8%, the closed-ended sector saw a 4.46% uplift, and the value of non-Guernsey schemes, where some aspect of management, administration or custody is performed locally for funds domiciled outside the island, was up by more than 11%.
The significant growth in this line of business from outside the island shows Guernsey to be a centre of excellence for servicing international structures, recognised by many other jurisdictions, and is a demonstration of real substance for the local industry. Substance is increasingly becoming a big issue for the industry globally, and Guernsey has developed a service infrastructure on-island over many years which is the envy of many jurisdictions and is paying dividends now.
In the past 12 months we have seen growth in real estate, which is reflected in the figures. Although we may be better known for private equity funds, we have a significant number of real estate funds domiciled in Guernsey and the uplift we are seeing represents both an increase in business and a rise in property values seen in recent months.
I am also excited about the prospects we are seeing in new business streams from South Africa, where investment managers are looking at enhanced opportunities to reinvest client money outside of the country, and seeking to attract capital from overseas institutions and high net worth individuals. Offshore investment funds in Guernsey are well-placed to capture that market, and we are starting to achieve traction in the country.
We also have other workstreams in place to attract new business, promoting Guernsey’s ability to offer global distribution and attracting new managers to move to the island as a hedge against potential issues caused by Brexit.
I look forward to seeing the positive noises I am hearing so far in 2018 reflected in the official statistics as the year goes on.