02 March 2012

Guernsey fund figures show no room for complacency

New figures for the Guernsey funds sector show there is no room for complacency, according to Peter Niven, Chief Executive of Guernsey Finance – the promotional agency for the Island’s finance industry.

Statistics from the regulator, the Guernsey Financial Services Commission (GFSC), show that the net asset value of funds under management and administration in Guernsey decreased by £10.2 billion (3.7%) during the final quarter of last year.

This represents the second consecutive quarterly drop in the value of the Island’s funds business but follows eight straight quarters of growth. This means that the total value of funds under management and administration reached £261.4 billion at the end of 2011, which is a rise of £4 billion (1.6%) year on year.

Mr Niven said: “What we can see from these figures is that the number of Guernsey closed-ended schemes under management and administration actually rose during the final quarter of last year but across the board there was depreciation in the value of our funds business.

“Of course, taking 2011 as a whole, there was actually growth in the value of funds business in Guernsey. This is very positive, especially considering the investment climate but we have to be aware that after strong growth in the first six months of the year to reach a record high of £274 billion, we have seen a contraction during the second half to reach £261 billion at the close of 2011.

“Much of this reflects the continued uncertainty and nervousness in the international investment community given the protracted Eurozone crisis and the general global economic downturn. However, it also shows that we cannot be complacent and in fact, this is the time in the economic cycle when we need to be out in the marketplace promoting Guernsey as a funds domicile so that we are among the first tier of jurisdictions under consideration by managers and advisers when the general conditions are more suitable for doing business.

“Indeed, this is a strategy which has been wholeheartedly endorsed by a new report from Oxford Economics which reviews Guernsey’s economic profile and assesses future opportunities. It highlights the importance of promoting Guernsey both in traditional and new markets and this is precisely what we have been doing just this week with one team of Guernsey Finance and industry representatives attending the private equity conference, SuperReturn International, in Berlin and another at the Russian Fund Forum in Moscow.

“In addition, we have another team of Guernsey Finance and industry representatives attending the property conference, MIPIM, in Cannes next week and this will be followed by attendance at the BVCA Mena event in London later this month. We already have a busy programme of activity in place, including the Guernsey Funds Forum in London at the start of May and what these latest figures show is that we need to ensure that we maximise these opportunities and then build on them in the future so that we can continue to grow the Guernsey funds business.”

The new figures from the GFSC show that Guernsey domiciled open-ended funds reached a net asset value of £55.3 billion at the end of 2011, which was a decrease of £2.1 billion (3.6%) during the quarter and down £2.6 billion (4.5%) year on year. The Guernsey closed-ended sector was valued at £119.1 billion at the end of December – down £6.6 billion (5.2%) during the last three months of 2011 but up £9.6 billion (8.8%) compared to twelve months earlier. Non-Guernsey schemes, where some aspect of management, administration or custody is carried out in the Island, fell by £1 billion (1.1%) during the quarter to reach £87 billion at the end of 2011, which is £3 billion (3.3%) lower than the value at the end of December 2010.

Patrick Firth, Chairman of the Guernsey Investment Fund Association (GIFA), said: “Market conditions are far from ideal for business at the moment but nevertheless our funds sector has proved more robust than many of our competitors in recent years. It is therefore disappointing to see two consecutive quarters of contraction in the value of our funds business but this does show that we cannot take anything for granted and that we need to make sure that we are marketing Guernsey as strongly as possible to ensure our long term success.”

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