The fixed income manager’s executive partner and chief investment officer, Andrew Seaman, told a panel debate at an event held by Guernsey Finance, the marketing arm of the crown dependency, in London that managers had to respond to investor concerns about increasing costs, and that his firm had set up duplicate fund structures in Guernsey.
“The reason we have both is that they appeal to very different audiences – there is huge demand for Ucits in Europe. If you haven’t got it, you can’t really sell in Europe at all. But a lot of regulation and cost goes with it,” he said.
“The Ucits brand is extremely successful but comes with a lot of regulation, and eventually it may regulate itself out of business.”
Seaman said setting up funds in Guernsey was very cheap and speed to market was very quick.
“If you are based outside of Europe and looking where to put your funds, why would you want to put it in a very bureaucratic, highly regulated area, which is more expensive than elsewhere?” he said.
“We are increasingly seeing clients in Asia, Australia, Switzerland, and the US considering options other than Ucits. That wasn’t the trend a few years ago but is much more common today.”
Bespoke solutions needed
Also on the panel, PwC UK asset management tax partner, Robert Mellor said the future for managers was having to think about a range of sister vehicles to suit the needs of different investor groups.
“The landscape going forward is more about a tailored conversation with investors on which fund product suits them,” Mellor said.
“Cost comes with that, but one thing we find is that US clients don’t want to feel they have to have just an onshore European product. If you push non-euro investors into that, you’re laying all the costs and overlay of reporting and regulation on all the investors who are not causing the issues.”
Commenting on the panel, Guernsey Finance chief executive, Dominic Wheatley said the island’s position would be strengthened after Brexit.
“Guernsey supports international investors and should be seen as a pivot to the rest of the world for the city, reinforcing our position as a complementary centre to the UK asset management industry, and we believe our position will only be strengthened after Brexit,” he said.
