Expertise has emerged as this year’s top factor in deciding where to domicile alternative investment funds, according to Funds Europe/Jersey Finance research. The report also signals that the industry is finding it more difficult to find talent.
Fifty-seven percent of survey respondents cited expertise as their main concern, with 46% choosing regulatory standards, 39% choosing the legal framework and 32% basing their decision significantly on costs.
This represents a turnaround from the survey last year when regulatory standards were the top factor affecting domicile choice for 58% of survey respondents. Expertise was the second-most important factor, chosen by 47% of respondents.
Respondents this year also said that expertise was the key challenge for fund domiciles in dealing with greater regulation: 40% deemed expertise to be the most important concern. Costs came a close second, with 37% choosing this as their most important concern.
Survey respondents also indicated that it was now more difficult to find talent than it had been previously. Asked how hard it is to find talent across both the front and back office, 69% of respondents said it was difficult, with 23% of them identifying a real talent shortage. This is a significant increase on last year when only 48% thought talent was hard to find, with 19% of those describing a real shortage.
The growing emphasis on expertise reflects the evolving nature of the alternatives sector. As the sector moves into the mainstream, greater regulation and increased reporting requirements due to ESG and other factors mean expertise is at a premium.
Talent also came up when respondents were asked what they would change about the industry if they could change one thing. Some respondents wanted it to be made easier to use cross-border talent, while others championed diversity as a way forward.
Other key wishes were for greater transparency in costs, fees and products, as well as more uniform regulation. Overall, in a more transparent and robustly regulated industry, expertise now appears to trump considerations such as tax neutrality when choosing domiciles for alternatives. Tax neutrality was selected as a top three factor in domicile choice by 29% of this year’s respondents, down from 35% last year.
*The full results are in our report “Alternatives Future Directions”. Read report here.
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