Domiciles Q&A: Mourant’s Watson on Guernsey

Is Guernsey gaining or losing interest as a fund domicile?

The net asset value of total funds under management and administration in Guernsey for the quarter ended March 31, 2019, stands at £280.4 billion ($341.7 billion; €310 billion). This represents an increase in net asset value of £17.9 billion, or 6.8 percent, from the previous year.

What is the attraction compared with other domiciles?

Guernsey has a global distribution reach, high-quality and experienced service providers, and a range of flexible fund vehicles and modern financial services laws. This is all set against a backdrop of uncontroversial tax neutrality for funds businesses, and proactive, globally leading adherence to developing international standards.

What is the fund structure of choice?

Guernsey provides a diverse range of fund regulatory products, offering a sliding scale of regulation and cost, depending on manager and investor requirements including open or closed-ended private investment funds, registered open- or closed-ended schemes, and open-ended or closed-ended authorized funds.

Which investors does it appeal to?

As a mature alternative funds domicile, Guernsey has found favor with investors around the world for nearly 50 years. The national private placement regime provides a proven, fast route to access institutional investors in 22 of the 28 EU member states including the UK, Ireland, Nordics, Benelux and Germany.

What is its weakness/downside compared with other domiciles?

As the AIFMD passport is not currently available to third country managers, we have seen some promoters attracted by the potential benefits of marketing their funds across the EU in reliance on the passport and domiciling into the EU accordingly. However, in our experience, NPPR is working well, particularly with promoters who have a targeted list of jurisdictions to market into and are finding NPPR cost-effective and time-efficient compared with the passport.