While the exact number of the world’s hedge funds is speculative, it is widely acknowledged that the majority are domiciled in the Cayman Islands.
Now, data compiled for the first time by the jurisdiction’s financial regulator, the Cayman Islands Monetary Authority, provides an in-depth statistical review of Cayman Islands-regulated funds.
The Investments Statistical Digest, released by CIMA recently, 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, states a press release.
Among the information reported are fund assets. As at 31 December, 2006, the aggregate net asset value of the funds captured was US$1.387 trillion. Gross assets under management totalled US$2.316 trillion. The largest proportion (US$388 billion or 28 percent) 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 US$250 billion (18 per cent) 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 calculation services, administered net assets of US$606 billion and US$434 billion, respectively. Ireland was second, with net assets under administration totalling US$364 billion and US$346 billion, respectively, for the same services.
Cayman Islands-regulated funds generally cater to high net worth individuals and institutional investors.
In fact, almost two-thirds of the funds required an initial subscription of US$500,000 or higher. Fifty percent of the funds had a master/feeder structure and the two most popular investment strategies were multi-strategy and long/short equity.
Mrs. 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 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.
Mrs. Cindy Scotland, CIMA’s managing director, said: ‘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.’
The Investments Statistical Digest is available on CIMA’s website at www.cimoney.com.ky.