In a recent survey of 250 asset managers in 15 countries, 62% said that they plan to domicile their funds in Luxembourg, 55% in Ireland and 25% in the Cayman Islands.
The survey, commissioned by the State Street Corporation and published on 4 July 2018, said, “All three domiciles are among the top five most sought-after locations.”
“As cross-border products are increasingly seen as the optimal path for growth, asset managers are looking for domiciles with an established regulatory environment,” said David Suetens, head of State Street Luxembourg in the report. “Locations such as Luxembourg and Ireland, that can meet regulatory obligations confidently and efficiently, are seen as the natural choice by asset managers, allowing them to mitigate risk, achieve economies of scale and reach investors globally.”
According to the survey, the key elements influencing asset managers in domicile selection are: established regulatory environment (27%); distribution footprint (20%); favourable tax treatment (16%); existence of a strong servicing infrastructure (16%); strong overall reputation (13%) and cost (10%). All areas where Luxembourg scores highly.
It goes on to say that, “Despite uncertainty about the future political and regulatory environment […] asset managers globally are positive about their prospects for increasing their cross-border fund sales to investors around the world.” Indeed, 64% expect their cross-border to grow over the next five years, with alternative strategies expected to see particularly strong growth. Traditional, long-only, products are expected to account for 92% of the product offering in five years’ time.