Supporting US Fund Managers’ Ambitions

Jersey’s alternative funds platform is tried and tested and is supporting the growing ambitions of US fund managers. With a unique shared history dating back to the 17th Century – evident notably through the name of the island – Jersey has been working with organisations and individuals across North America for many years.

As a specialist funds hub, Jersey has positioned itself as an attractive location for cross-border investment and, particularly, as the ideal gateway to Europe for non-EU, including US, fund managers – specifically against the backdrop of the EU’s Alternative Fund Managers Directive (AIFMD), introduced almost ten years ago.

It was with this in mind that Jersey Finance established an office in New York three years ago and, most recently, held a successful roadshow covering a number of locations including San Francisco, Miami and Chicago.

The message to US managers over recent years, and throughout the recent roadshow, has been clear – Jersey can provide straightforward access to Europe through National Private Placement Regimes (NPPRs), a well-established model offering distinct advantages – in particular, avoiding the heavy cost and administrative burden necessary under full AIFMD compliance, which is unavoidable if opting for an EU-based jurisdiction.

It’s a message that has resonated well with managers in the US. Since Jersey Finance opened its office in New York, the number of US-originated fund structures has grown 61%, while the value of fund assets under management serviced in Jersey has risen by 22%, according to Monterey.

In addition, enhancements to Jersey’s Limited Partnership legislation earlier this year and changes to the EU’s rules around reverse solicitation for non-EU alternative funds have also heightened Jersey’s appeal among US managers.

Meanwhile, Jersey has continued to evolve its relationships and deepen its proposition in the US market this year. There is, for example, growing interest in Jersey’s capabilities in the structured finance space, specifically in Collateralized Loan and Collateralized Debt Obligation vehicles migrating to Jersey from other jurisdictions.

It is not one-way traffic though; Jersey is increasingly conscious of the need to evidence the positive impact it has in markets around the world, including North America. To that end, Jersey Finance commissioned research last year to quantify Jersey’s contribution to ‘global value chains’.

That research found that Jersey supported 318,000 jobs specifically in North America and $33 billion of GDP annually, an impressively positive contribution for a jurisdiction of Jersey’s size.

Such a forward-looking approach hasn’t evolved overnight, however.

For the past 20 years, Jersey has been committed to creating the ideal ecosystem for cross-border investment, while honing its platform for the alternative asset classes.

Looking for opportunities to innovate, in particular, has proved a popular approach; the Jersey Private Fund (JPF), first offered five years ago, has been a resounding success. The structure allows up to 50 investors to establish a fund in under 48 hours.

Recent figures for the industry underpin the success of this strategy – the total value of funds business undertaken in Jersey reached a new record high at the mid-point of 2022, with the combined value of assets under administration (AUA) in regulated funds and assets under management (AUM) in JPFs growing over the first half the year to stand at a total of US$632.6bn.

That doesn’t include the considerable value of fund assets held through corporate vehicles in Jersey too.

Regulated funds business alone has more than doubled in size over the past six years, while it’s particularly interesting to note that, five years on since the structure was introduced, there are now more than 550 JPFs established in Jersey, with it very much now seen as a go-to structure.

But it is Jersey’s global distribution capabilities that have distinguished it as a cross-border hub, and in particular its position as a gateway to European investors.

“Positioned outside of the EU itself but with strong connections with EU Member States, Jersey has offered non-EU managers an efficient and stable centre for accessing Europe without the complexity of establishing an operation within the EU under AIFMD regulations.”

Around 200 non-EU managers are currently marketing their funds into the EU through private placement via Jersey. That figure has grown by almost 60% over the past five years.

Jersey recognises, though, that remaining on the front foot is vital if it’s to maintain its leading position and, with that in mind, the Island’s industry continues to innovate – for example, making legislative and regulatory enhancements to its regime, such as the aforementioned amendments to Jersey’s Limited Partnership legislation, or introducing pragmatic disclosure measures to attract good quality ESG investment.

The island is also focused on integrating technology and digital capabilities into its framework to support functions such as onboarding, compliance and reporting.

By continuing to target such efforts in key areas, while maintaining a focus on diversifying global reach, Jersey’s funds industry is well placed to maintain its momentum as a leading European time-zone hub for alternative funds and to truly support US managers with their global ambitions.

This article was first published on AYU’s digital platform. AYU is a private members club that connects a global community of hedge funds, family offices and alternative investment professionals.