Factsheet
Jersey for Hedge Funds Future-proof solutions for US promoters and investors ‘Old Jersey’ is a leading, future-focussed international finance centre (IFC), located between the UK and France. The Island’s unique constitutional position as a British Crown Dependency means that it has domestic autonomy, which has been preserved for the last 800 years. Being outside the European Union (EU) means that Jersey is able to offer more flexible funds regimes. Jersey’s special relationship with the UK means that it will continue to have access to UK investors, despite Brexit. New international governance requirements for hedge funds make Jersey a clear choice. Jersey can offer a centre of ‘substance’ to cater for the requirements of the Organisation for Economic Co-operation and Development’s (OECD’s) Base Erosion and Profit Shifting (BEPS) project. The Island has been home to hundreds of hedge funds and more than 20 hedge fund managers are currently based in Jersey, following a mixture of discretionary, quantitative, and systematic, global macro, managed futures and commodity trading advisor (CTA) strategies. Jersey is also seeing an increasing number of hedge fund managers looking to relocate all or part of their business here, from well-established operations through to start-ups.
AIFMD equivalent of NPPR’s route
Flexible funds solutions Jersey offers a full range of flexible fund structures and regulation. Access to professional investors throughout Europe continues to be available through local national private placement regimes (NPPRs). And, because Jersey is not part of the EU, for those Jersey funds and Jersey managers that target ‘Rest of the World’ (ex-EU), the requirements of the EU’s Alternative Investment Fund Managers Directive (AIFMD) will be out of scope.
Out of AIFMD scope solutions
Jersey fits the bill for US managers looking for a base outside the EU, but within the European time zone, and beyond the main requirements of AIFMD, but with continued access to UK and EU investor base. A significant number of US asset managers are already promoting various types of funds domiciled here. US-promoted funds represent US$28.5 billion of the assets under administration in Jersey and the US is Jersey’s second-largest fund promoter market behind the UK (Monterey Insight Jersey Funds Report 2017). Hedge fund investments made or held from Jersey have matured over the last 30 years. The net asset value of regulated hedge funds in Jersey stands at US$69 billion, 17% of the total net asset value of funds under administration (Jersey Financial Services Commission, JFSC, December 2017).
Hedge funds Hedge fund manager figures now place Jersey in the top 10 globally, with large players such as Systematica, Brevan Howard and BlackRock relocating here.
From our experience to date, Jersey is a great jurisdiction for the investment management industry. A fast, efficient and commercially-minded financial environment, with a strong regulator, that is going from strength to strength. Ben Dixon General Counsel and Director, Systematica
Factsheet
Jersey for Hedge Funds What sets Jersey apart? Expertise and substance We provide exceptional standards of specialism and service. Jersey is home to a large number of major and boutique fund administrators, offering comprehensive support through a broad range of fund administration services, including company secretarial, compliance, accounting and investor reporting. Alongside this pool of expert fund administrators are lawyers and auditors, together with a host of professional nonexecutive directors, with extensive knowledge and experience. There are already more than 120 asset managers with a strong office presence in Jersey and this number is growing steadily.
Speed and ease Our flexible funds regime caters to all investor requirements. It offers a sliding scale of regulation and cost. The recently introduced Jersey Private Fund allows funds with up to 50 investors to take advantage of a fast track authorisation process and lighter ongoing regulatory requirements, in as little as 48 hours. This is proving very popular.
Close to the UK and mainland Europe Jersey is in a central time zone that reaches the US, Europe and Asia across the same business day. Being outside the EU, it is an ideal location for consolidating EU and non-EU funds in one jurisdiction.
Transparency and combatting financial crime We’re proud of our commitment to the highest standards of financial regulation, which have been acknowledged by the OECD, the International Monetary Fund (IMF) and the Council of Europe’s Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL). Jersey has been a ‘first wave’ signatory to all key information exchange programmes, including the Foreign Account Tax Compliance Act (FATCA), the Common Reporting Standard (CRS) and the Base Erosion and Profit Shifting project (BEPS) and is also unique in long-maintaining a central register of company beneficial ownership to help share information with tax authorities globally. The JFSC is a respected and approachable regulator.
A ‘no change’ jurisdiction, despite Brexit Jersey provides a ‘no change’ solution for access to UK investors. The British Government has been clear that the special relationship between Jersey and Britain will not be impacted by Brexit. We have never been part of the EU so we have longstanding bilateral relationships with EU member states and established market access arrangements, which will not be affected either. We are uniquely placed and this sets us apart from other international finance centres.
Factsheet
Jersey for Hedge Funds
A simple tax-neutral system Jersey has a clear and simple tax-neutral system that sets us apart from other countries. Tax is paid where it needs to be. The funds do not pay tax, the investors pay all the correct tax to their respective governments. There is no double or triple taxation of funds and investors. Our tax model simply allows investors to work together more efficiently.
Vehicles and structures As a forward-thinking jurisdiction, Jersey offers a wide range of vehicles and fund types. Hedge funds are commonly structured as Jersey Private Funds, Jersey Expert Funds and Regulated (or Unregulated) Eligible Investor Funds. All regulation of funds in Jersey is appropriate to the risk of the structure and the type of investor.
Environment and infrastructure Overall, it’s Jersey’s forward-thinking approach, robust regulatory framework, and political and economic stability that makes us one of the world’s leading IFCs. Also, we are in the same time zone as London and less than an hour’s flight away. Our data centres are world-class, while our high-speed and high-bandwidth communication links allow us to operate and integrate internationally. Last but not least, Jersey has an outstanding coastal environment and quality of life for those looking to relocate.
US$301 billion net asset value
of all alternative funds being administered in Jersey
Jersey Financial Services Commission, 31 December 2017
70%
of Jersey’s funds business Hedge Private equity Venture capital Real estate Infrastructure
Jersey for Institutional Investors
With pension funds increasingly looking to hedge funds, against a backdrop of changing demographics, Jersey has much to offer. We already provide financial services to a large number of institutional investors investing in Jerseydomiciled and administered funds and corporate structures. In 2017, Europe Economics estimated this to include around US$69 billion of funds under administration in Jersey, of which around US$51 billion was from pension funds. A further US$156 billion was estimated to be held by pension funds through Jersey corporate structures.
Ease of doing business
Tax neutrality
Portfolio diversification
Jersey’s offers tax-exempt institutional investors:
Ease of doing business, leading to cost savings and lower risk management costs
Tax neutrality, facilitating cross-border investment
Portfolio diversification, for reliable returns on long-term investments
‘Jersey for institutional investing: A clear choice’ Europe Economics, November 2017
Contact us For more information on Jersey for hedge funds, please contact a member of the Jersey Finance team on: T: +44 (0) 1534 836000 | E: jersey@jerseyfinance.je | www.jerseyfinance.je
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Disclaimer: This factsheet is only intended to provide a general overview of the subject matter. It does not constitute, and should not be treated as, legal advice.