In comparison, Jersey maintains an economically and politically stable jurisdiction to future-proof investment strategies, including continued access into the UK and Europe post-Brexit.
In Q2 2017, Jersey had 254 AIFs and 131 AIFMs, rising in Q4 to 291 AIFs and 149 AIFMs.
The current number of AIFs is 295 and while official figures for June 2018 have not been released yet, the estimate based on continuing trends is 164 AIFMs and 309 AIFs by the end of Q2 2018.
Taking the total net asset value administered and pooled in Jersey-registered funds (not just AIFs), the Jersey Financial Services Commission’s statistics show an increase from £265m ($350m) in Q3 2017 to £291m in Q4 2017, with latest figures for June 2018 expected to exceed the £300m mark.
Providing safe harbours and allowing a stable environment for planning a fund’s future is not the whole story though. From a business standpoint we see managers focus on the following four points:
1. Approved regulatory environment
As confirmed by the OECD, MONEYVAL and others, Jersey has a sophisticated regulatory environment which provides flexibility and legitimate confidentiality for investors while at the same time exercising strong oversight to combat tax evasion, money-laundering and terrorist financing.
The European Securities and Markets Authority (Esma) agrees, as Jersey is among only five non-EU countries that received its endorsement for an EU passport under the AIFMD, which allows AIFMs to market directly into all EU member states.
There is no date set for when the “third country passports” will be offered but it is expected that this point will gain traction as Brexit progresses.
2. Successful National Private Placement Regimes (NPPRs)
The EU investment funds market has a volume of about €14.3trn, yet only 3% of AIFs are registered for sale in more than three EU member states.
Looking at these figures, Elliot Refson from the Jersey Funds Association makes the point that therefore 97% of AIFs concentrate on three investor markets or less. These 97% do not use the broad market access an EU passport offers and could (and do) easily rely on NPPRs.
NPPRs do not need to comply fully with AIFMD. They offer flexibility, quick market access, cost-effectiveness and sound regulatory oversight, ideal for EU-focused AIFs based in Jersey. In Q4 2017 149 Jersey AIFMs were licensed through NPPRs to market into Europe.
3. Jersey Private Funds (JPFs)
JPFs are a popular new product, which offers up to 50 professional investors speedy establishment (48-hour regulatory turn-around) and a regulatory light-touch approach (regulation concentrates on the Jersey-based designated services provider as opposed to the JPF itself, an arrangement compliant with international standards).
Marketing into EU countries (if desired) works through NPPRs and a JPF may be an AIF. JPFs can be closed-ended or open-ended and use any type of investment vehicle. Over 100 JPFs have already been established less than one year after its creation.
Jersey has been one of the inaugural signatories of the OECD’s Base Erosion and Profit Shifting framework, which imposes certain substance requirements on legal entities. For AIFs and AIFMs this includes the need to have their directors and employees largely reside locally and exercise independent judgement instead of merely taking orders from a head-office based elsewhere. AIFMs should also hold contracts in their own name and key decisions on risk, activities and finance should be made locally. Jersey has over 12,000 people working in financial, legal and corporate services, providing a high degree of management substance, infrastructure, good governance and expertise for businesses.
In short, Jersey’s substance, reputation, location, relations with other markets, stability and business-friendly tax and regulatory options are key drivers for the continuing growth in Jersey-based funds.