Cayman Fund Exodus 'Myth' Dispelled

by Phillip Morton, Investors Offshore.com

05 January 2011

Cayman Finance has rebutted what it has described as ‘unsubstantiated’ claims that Cayman funds are re-domiciling to European nations, in particular to Ireland.

Insisting that the Cayman Islands remains as robust in terms of its funds industry as before the crisis, and the EU's Alternative Investment Fund Managers Directive, the agency stated:

“The Irish fund industry states that they have doubled their registered funds to 7.4%, but these statistics pale in comparison to the Cayman fund industry, which continues to grow by approximately 95 funds per month,” citing figures from the Cayman Islands Monetary Authority. “The regulator is reporting a natural attrition rate of de-registrations of approximately 5%, which has been a typical rate over the past several years, indicating stability in the Cayman industry.”

“The regulator has also confirmed that only four funds have cited re-domiciliation to the EU as their reason for termination, [two of those funds] redomiciled in Malta, and two in Luxembourg.”

In respect of the Cayman Islands, Simon Osborn of International Fund Investment, said:

“For institutional investors and managers, the well understood path of the Cayman fund – non-bureaucratic, quick set up times, high quality service providers and its solid reputation - is well-known and that familiarity breeds trust.”

Osborn further said: “A number of managers believe that the AIFMD could drive managers out of the EU and only managers serious about EU distribution will have EU domiciled funds. The rest will continue to use offshore structures.”

Cayman Finance said the islands are well placed in terms of the EUAIFM Directive, and are compliant on the relevant issues. Cayman Finance is currently commissioning a ‘gap analysis’ to highlight any areas for improvement that will have positive effects in the long run, the agency said.

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