Opportunities and Risks for the Funds Industry in 2022 – Fund Management/ REITs


Written by

Jo Peacegood and Stephen Rouxel

Guernsey Investment and Fund Association

What awaits the investment fund industry in the next year? Jo Peacegood and Stephen Rouxel, President and Vice President of the Guernsey Investment & Funds Association respectively, share some predictions and what it will mean for Guernsey.

Jo Peacegood

There is a significant amount of global capital available for investment, which means that the fund market continues to grow globally. We have seen the statistics from the Guernsey Financial Services Commission (GFSC) in 2021 and the sector continues to thrive. We have also heard from service providers (locally and in some of our key markets) that there is a healthy pipeline which puts Guernsey in a strong position to continue to thrive.

Guernsey’s offer is convincing. We have a suitable system, highly regarded service providers with extensive experience who are also flexible and adaptable to investor requirements, and an accessible regulator – so all key ingredients. However, with the economic pressures created by COVID and a number of new global tax initiatives, Guernsey needs to ensure it is on this global stage by marketing its fund industry experience and ensuring that we promote the island as a force. for the global good; and it requires the power of the entire industry to pull together and continue to market Guernsey as the jurisdiction of choice.

Investor protection, taxation and anti-money laundering continue to be topical and Guernsey continues to ensure that it adopts the relevant global standards while taking into account investor requirements and market expectations, thus putting relevant protection around investors’ assets and ensuring that it is well placed to face global challenges. .

Technology continues to be an engine of growth and an attractive investment opportunity. It also gives businesses (particularly service providers) an edge to be more effective and efficient, combat the shortage of employees faced by all jurisdictions, and respond to unforeseen challenges such as the pandemic.

Regulation is being introduced around cryptocurrency to protect potential investors and as a result, it is becoming a more mainstream and accessible asset class. Guernsey has already authorized a crypto ETF, demonstrating the innovation and experience gained in the field. We also expect growth in more esoteric assets.

In addition, we expect growth in private equity and real estate. Guernsey has been serving these asset classes for over 50 years and therefore has extensive expertise. We expect investment to increase as investors begin to look outside of more traditional asset classes.

ESG continues to develop with many gaining a better understanding of what E, S and G really mean. Guernsey has had experience in this sector for several years and is considered a market leader so is able to support investors and sponsors in this area.

Speed ​​to market continues to be sought after and fast-track regimes established in Guernsey have made the island a market leader; when combined with expert service providers committed to the highest levels of customer service, this puts us in a position of strength.

We expect the UK to start putting in place the foundations to build its financial services sector, so working closely with the UK will be integral and can help build our sector as well. At the same time, Guernsey must continue to focus on its renewed strategic target markets and continue to adapt its schemes as needed.

Stephane Rouxel

Opportunities

There are plenty of opportunities for Guernsey in 2022 if the island’s financial services sector is ready to seize them. Global silver will start to pull back this way as there is a glut of troubled assets at rock bottom prices. I see a lot of attention in global real estate opportunities. Our speed to market could be important for the development of real estate products.

As private market managers start trying to tap into private wealth markets, there could be a way for Guernsey to get into the aggregation business by working with our fellow trustees. More and more fiduciary companies are getting fund licenses – we need to share our knowledge and expertise with these companies and develop this area.

We have seen increased cooperation between governments in the introduction of substance requirements and the introduction of an overall minimum tax rate. Some tax authorities are questioning the existing structures regarding compliance with the guidelines in place. We expect there will be more guidance to facilitate this and businesses should adopt these new standards.

Threats

Deglobalization

The protectionism of nations will continue to impact global capital flows and financial centers. I do not yet see this trend reversing even if it seems to have stabilized. There is a risk that other financial centers will start moving to capitalize on geographic opportunities. Luxembourg for Europe, Singapore for Asia. Guernsey will really only have one advantage over the UK who are trying to replace us, so we need to define our stand a bit more.

geopolitical conflict

Rising sanctions and East-West conflict will impact everyone but will focus on where we can do business. A good example is China’s data protection law which is a reaction to the Huawei/US issues. Sanctions will play an increasingly important role (and the growth of sanctions over the past two years is evident), which has a significant impact on financial services centers.

Learn more about investment funds in Guernsey in London on May 12, during the Guernsey Funds Forum 2022: Endless Opportunities.

For more information on Guernsey’s financial sector, please visit www.weareguernsey.com.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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