Investment fund numbers return to stability in 2011

In 2011, the number of fund registrations in the Cayman Islands recovered from its lowest figure in years, recorded in the fourth quarter of 2010.  

The registration and termination statistics for investment funds in the Cayman Islands show that on a quarterly basis, the fourth quarter of 2010 saw a mere 180 fund registrations.  

The figure, obtained from the Cayman Islands Monetary Authority through a Freedom of Information request, was well below the quarterly average of 270 in 2010, 290 in 2009, 413 in 2008 and 502 during the record year of 2010. 

However, it should be noted that fund registrations and terminations are cyclical in the sense that the fourth quarter consistently sees the lowest number of registrations and the highest number of fund terminations during any of the past five years. 

Fairly stable overall 

Overall the total number of funds in Cayman has been fairly stable since dropping from its highest level of 10,291 in the third quarter of 2008.  

The financial crisis and subsequent record numbers of redemptions at the end of 2008 and 2009 caused an overall fall in the number of registered funds to just over 9,400 today.  

Some 854 and 804 fund terminations in the last quarters of 2008 and 2009 were followed by 542 terminations in Q4 of 2010, only slightly above the fourth quarter termination figures seen before the financial crisis. 

The Cayman Islands government recently proposed to subject certain master funds to a $1,500 fee and regulation by CIMA.  

While no regulations or a timetable for implementation have been released yet, the fee and potential additional costs, for instance for a local audit sign-off, may put further pressure on fund registration numbers.  

However, most industry experts have not considered the fee to be excessive. 

2009 remains the only year during which fund terminations exceeded the total number of registrations. In 2010, 1,083 registrations outweighed a total of 942 terminations. 

In the first two quarters of 2011, fund registrations were slightly lower than during the same time period in 2010, falling from 614 to 593, while terminations increased slightly from 247 to 284.