The Channel Islands are set to challenge Luxembourg and other domiciles as a centre for funds and fund services – partly on the basis of speed to market, according to Damien Fitzgerald, head of funds for Guernsey at Zedra.
According to Fitzgerald, the region’s flexibility means it is becoming an increasingly viable centre for private funds and alternative funds.
He highlights that the Channel Islands cater to cryptocurrencies – such as the launch of a cryptocurrency ETF in Guernsey earlier in 2022 – and in sustainable investments such as solar panels and forestry asset classes.
Fitzgerald added: “The regulatory landscape in place allows to establish the appropriate structures and bring them to market quicker than other regions.
“It’s also easier for a first-time manager without a track record to get funding, and that drives innovation too.”
Last year, the Guernsey Financial Services Commission reported a 23.7% year-on-year increase in the net asset value of Guernsey funds, taking it above £300 billion for the first time.
Jersey also showed popularity as an alternative investment fund location with net assets totalling £450 billion.
However, Luxembourg’s assets under management stood at €5.9 trillion at the end of 2021, according to the Luxembourg fund association Alfi.
The strongest asset growth in the Channel Islands was seen in private equity and venture capital which grew by 27% year on year.
Fitzgerald argues that the Channel Islands offer several advantages over other domiciles, such as being European but non-EU, and although both Guernsey and Jersey adhere to the EU’s Alternative Investment Fund Managers Directive, they are not signatories and as such can avoid some of the higher costs that he says Luxembourg’s private funds entail.
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