The hedge fund sector continues to grow, attracting a broader range of investors and increasingly extending its presence beyond the US into Europe and Asia. Hedge fund assets under management have increased 6% surpassing the US$2.3 trillion mark and are on track to exceed the all time high of US$2.7 trillion. European share of these assets was 23% by 2013. The UK is a significant centre for hedge fund activity within Europe, accounting for just over 50% of all hedge funds headquartered in the region and 12% of all hedge funds globally. Locally, the industry’s growth is evident in the increasing numbers of hedge fund managers relocating their management and administrative operations to the Islands.
As the hedge fund industry evolves, attracting new retail and institutional investors, the attention of regulators and fiscal authorities is likely to continue to increase. The best centres will balance high-quality regulation and infrastructure on the one hand, with the potential for tax-efficient structuring on the other. With investors in the driving seat, financial centres must give managers the flexibility to match transparency and governance to investor profiles.The Channel Islands’ competitiveness internationally endows hedge funds with credibility and a competitive edge in a new world where jurisdictions’ quality has assumed far greater importance.
In the new world, hedge funds have great opportunities to attract capital from developed world pension funds and developing world SWFs, both of which are seeking fresh ideas for generating investment returns. But in the competition for capital, the choice of fund domicile has just become a critical factor.
In the Channel Islands, both Jersey and Guernsey regulators have been proactive in creating a regulatory environment for the industry which offers appropriate, innovative, and relevant legislation designed to keep the islands at the forefront of the industry.
Furthermore, the islands' proximity to London and ease of travel is attractive to fund managers who must ensure they can fulfil central management and control requirements, without compromise to their client relationships.
The PwC Channel Islands firm have specialists in audit, business advisory, tax planning, risk management, regulatory compliance, business process and systems consulting services who are familiar with the issues faced by hedge funds and their managers. Our experts can help you meet the challenges of today’s market and realise opportunities presented by the growth in this sector.