Cayman funds licence numbers rebound

The total number of mutual funds in the Cayman Islands has increased in the second quarter of 2009, reversing a declining trend according to the latest figures released by the Cayman Islands Monetary Authority.

The number of mutual funds licensed by CIMA grew by over 1.2 per cent to 9,825 from 9,705 in the previous quarter. It is the first time licence numbers have increased since the financial and economic crisis impacted the number of funds late in 2008.

Total mutual funds licences reached their peak at 10,291 in October 2008 before taking a steep decline. The number of registered funds is as a result still down compared to one year ago, but the current rebound could be interpreted as a sign of recovery for the funds industry in Cayman.

John Lewis, Chairman of the Cayman Islands Fund Administrators Association, confirmed that he is seeing new growth after a period of 6 months of stagnation in new fund formation.

‘I think it is too early to say if this is a sign of a long term and substantial growth as there are many external factors that could influence the sustainability of growth both positively and negatively.

‘However we are cautiously optimistic as a result of this growth and the performance of the hedge fund industry in general in 2009,’ he said.

‘Clearly this ‘glass half full’ scenario is definitely a major improvement to the difficult times of a year ago.’

The number of mutual fund administrators continued to decrease slightly dropping to 144 down from 148 in the previous quarter and 155 at the end of 2008.

Mr. Lewis ascribed this to business decisions by Administrators around the world on how to service their clients.

‘Amongst other things, this is influenced by ease of doing business, costs of doing business and the availability of local and ex-pat staff.

‘CIFAA is working with Government and other members of the financial community to make Cayman as attractive as possible to current and potential future Cayman-based Administrators,’ Mr. Lewis stated.

Mutual funds have been an extremely successful part of the Cayman Islands Financial Services Industry and displayed considerable growth since 2001.

The availability of professional services, the flexibility in terms of structures used to operate mutual funds as well as the legal, regulatory and tax environment are some of the reasons that have made the Cayman a popular location for the investment funds industry according to CIMA.