Looking at alternative fund domiciliation next, we asked respondents to identify the key factors in the decision-making process (fig 8).
The responses in decreasing order of popularity were regulatory standards (58%), expertise (47%), legal framework (44%), tax neutrality (35%), service quality (33%), cost (31%), distribution capabilities (27%), speed to market (18%), familiarity (16%) and quality of non-executive fund directors (4%).
Changes in international regulation and market volatility are posing serious questions for alternative fund managers, but fund domiciles that can provide reassurance around key issues such as substance, distribution and transparency will also be well placed to respond to the needs of managers.
Regulation, expertise and legal framework are often highlighted as critical components of the decision-making process for alternative fund domiciliation, and the survey’s findings seem to support this view.
“Robust yet proportionate regulation appears to be a key driver of domiciliation choice,” said KPMG’s Honeywood. “Investors, promotors and other key stakeholders need to be comfortable that the regulatory environment will be fit for purpose and need to be confident that the regulatory environment and the application is tried and tested, stable and will not present additional complications in due course.
“In addition to regulation, quality remains key – the reputation as a jurisdiction, quality of the workforce, service provision and access to – all key stakeholders require a location that works in practice as well as ticks all the technical, legal and regulatory requirements.”
Last year saw the value of assets administered in Jersey rise to a record £346 billion. What does this reveal about the importance of tax neutrality?
“Investors and managers both like simplicity, and the principle of tax neutrality, which underpins Jersey’s model, really resonates with that,” said Tim Morgan, a partner at law firm Mourant. “It means that a Jersey structure can be used to pool investor contributions from across the world, with no additional layers of tax being created.”
Jersey’s specific ability to meet the requirements of changes introduced in April last year to non-resident Capital Gains Tax in the UK was a case in point. Morgan said: “The introduction of the two elective regimes which allow offshore entities – often Jersey SPV companies or Jersey Property Unit Trusts – to either be treated as transparent under the new rules, or exempt from them but subject to ongoing reporting requirements, was a real validation from onshore authorities of the best practice Jersey offers.
“It was also an indication of the certainty Jersey can offer, to continue to enable international investment into the UK real estate sector.”
Continue reading the report: Regulation impact »
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