ROUNDTABLE: WHERE ARE WE NOW?


CAYMAN FUNDS


The Cayman Islands funds industry remains in good health, but there are still challenges that must be faced. Cayman Funds


invited industry leaders to Ernst & Young’s offices on the Island to discuss the major issues.


Peter Scott: We hear a lot in the UK about the Cayman funds industry. I suspect the perception is rather different from reality, so how is the funds industry doing in Cayman at the moment?


Jeffrey Short: Even though the December 2012 versus 2011


numbers according to CIMA’s website may reflect slightly lower numbers of registered funds, we need to discuss here the whole story, which is in fact a positive one.


PS: Do those numbers tell the whole story? Is that how you assess the health of the industry? Or is there a bit more to it?


Glen Trenouth: That’s a good question—how are we assessing


that? Is it absolute, or should we be comparing those numbers to the world economy in general, and how it’s doing in North America?


I think it’s very difficult to benchmark, or whether you should count


quality as well as quantity of funds. A lot of small funds start up and deregister very quickly because they do not survive. Perhaps we shouldn’t be including those, maybe we should look at a more consistent portfolio, which stays and survives year on year, because they have the management in place and the right people in place, and they are better quality funds.


John Ackerley: Certainly from the segment of the industry we see,


we’re seeing more set-ups in recent years than we would have done, so it looks healthier from that perspective, but obviously this is still a small slice of the industry. I don’t know what anybody else around the table would say.


Geoff Ruddick: I’d still say that there seems to be a trend: the big


are getting bigger—there continues to be consolidation in the industry. A lot of that comes simply from break-even cost levels being higher than they have been historically. It’s harder to come out with a launch


2 CAYMAN FUNDS | 2013


these days at $25 or $50 million and survive. Therefore, numbers in isolation I don’t believe are indicative of the health of the industry.


I think there are further influencing factors such as increased


regulation and corresponding costs, etc, that weren’t there before and therefore a lot of firms are bigger now; there are some healthy sized groups out there due to cost pressure and consolidation. Additionally, performance wasn’t all that great last year so we are seeing some of the smaller funds fade away, but I believe the general trend towards alternatives is pretty healthy.


JA: Also, just to go back to Glen’s comment, I think the quality of the


start-ups we are seeing today is probably better than it has been in the past, partially because the barriers to entry are higher than they were previously. People are a bit more thoughtful about how and when they launch.


PS: Anecdotally, do you find that there’s been a general improvement in that since the financial crisis hit, in the professionalism of the operations and the attention to detail?


Rafael Elias: We’ve seen more professionalism where new


launches are concerned and also a move away from the one or two- person investment manager model. Because the cost of compliance is much greater, investment managers are coming to the table with significantly higher seed funding, to ensure they can both deliver a good return and cover their overheads.


Tim Buckley: I think the flight to quality is an important trend that


continues. To reiterate what Geoff said about start-up costs: recently in the US a manager I was meeting with said that they thought it would be hard to justify starting up with less than half a billion initial capital because of the compliance cost in their market. From our perspective,


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10