New Report Throws Light On Cayman Fund Sector

Date: Monday, June 9, 2008
Author: Amanda Banks,

Data compiled by the Cayman Islands Monetary Authority (CIMA) has for the first time provided an in-depth statistical review of Cayman Islands-regulated funds sector, which is widely acknowledged as the world's largest domicile for hedge funds.

The Investments Statistical Digest, released by CIMA on 4th June, contains data gathered for the financial year 2006 via the Authority's new electronic reporting system.

The digest captures 5,052 funds and provides aggregate statistics on their financial position, structure, investment strategies, subscription activity, fund administration and investment management services.

Among the information reported are fund assets. As at 31st December 2006, the aggregate net asset value of the funds captured was USD1.387tn. Gross assets under management totalled USD2.316tn.

The largest proportion (USD388bn or 28%) of the net assets under management was based in New York, making that jurisdiction the top investment management location for Cayman Islands funds. The UK was second, with a total of USD250bn (18%) in net assets managed from that jurisdiction (predominantly in London).

The Cayman Islands was, however, the primary location for the provision of administration services to the funds. Administrators providing registrar and transfer agency services, and net asset value (NAV) calculation services, administered net assets of USD606bn and USD434bn, respectively. Ireland was second, with net assets under administration totalling USD364bn and USD346bn, respectively, for the same services.

Cayman Islands-regulated funds generally cater to high net worth individuals and institutional investors, the findings revealed. In fact, almost two-thirds of the funds required an initial subscription of USD500,000 or higher. 50% of the funds had a master/feeder structure, and the two most popular investment strategies were multi-strategy and long/short equity.

Yolanda McCoy, Head of Investments and Securities at CIMA, commented: "The data underscores the funds' diversity in terms of the range of investment strategies used, locations of service providers and types of structures. It also highlights their financial strength by capturing key figures such as net asset value, net income, and net subscriptions."

The digest covers information that CIMA has routinely required funds to submit as part of the regulator's ongoing oversight of the industry.

However, the Authority only gained the ability to aggregate, and thus report, these statistics as a result of implementing the E-Reporting platform for funds in March 2007.

The system has automated the submission and processing of the Fund Annual Return (FAR) and the annual financial statements from Cayman Islands-regulated funds. It runs on the XBRL (extensible business reporting language) technology, the emerging standard for reporting business and financial data.

Cindy Scotland, CIMA's Managing Director, observed that: "E-Reporting has not only provided an enhanced regulatory tool but is helping CIMA, as the regulator, to further increase the transparency of the industry. To our knowledge, this is the first time that a regulator has published aggregate statistics of the kind presented in the digest. It extends the range of data available on hedge funds, not just in the Cayman Islands but globally."