Alternative funds underpin stable second quarter finance industry performance

Wednesday 26 August 2015

Banking and funds activity in Jersey has remained stable with the latter being underpinned by a strong alternatives sector, according to the latest figures for Jersey’s finance industry.

Collated by the Jersey Financial Services Commission (JFSC) for the second quarter of the year (June 2015), the latest statistics show that, whilst the net asset value of regulated funds under administration in Jersey decreased marginally (around 3.5%) to stand at £218 billion, that total remains the third highest level since 2009 and 9% higher than in June 2014.

The data also reveals that the alternative asset classes continued to perform well, with total alternatives business including hedge, private equity and real estate funds growing 15% year-on-year and real estate and private equity values increasing slightly on the quarter.

In relation to the EU Alternative Investment Fund Managers Directive (AIFMD), further figures from the JFSC show that 205 Jersey funds are now being marketed into Europe through national private placement regimes (NPPR), an increase of 10% on December 2014, whilst 84 fund managers have now received private placement authorisation, up 40% over the previous six months.

Meanwhile, in the banking sector, the overall picture was one of stability, with the total value of banking deposits in Jersey banking institutions decreasing slightly by just over 2.5% to stand at £133.5 billion. Key figures from the latest report are as follows:

• The total value of banking deposits held in Jersey decreased by £3.8bn from £137.3bn to £133.5bn during the second quarter of 2015.

• The net asset value of regulated funds under administration decreased by £8.3bn from £227bn to £218.7bn during Q2 2015.

• The total number of regulated collective investment funds decreased by 24 from 1,322 to 1,298 over the quarterly period, whilst as at end of the second quarter of 2015 there were 126 active unregulated funds.

• The value of total funds under investment management stood at £20.3bn at the end of the second quarter of 2015.

• The total number of live companies on the register stood at 33,425

Geoff Cook, Chief Executive, Jersey Finance, said: "Overall, these figures paint a welcome picture of consistency and stability during a quarter when figures are traditionally flat. Moreover, a significant event during the quarter was the eleventh hour bail-out agreement for Greece, which revealed the future weakness of the Eurozone. Sterling strengthened significantly too, which decreased the sterling equivalent value of foreign currency denominated deposits by around £4.2 billion. This was the primary reason for the quarterly decrease in the total value of Jersey’s banking deposits.

“Meanwhile, the number of regulated funds decreased to 1,298. This slight decrease in the number of funds is expected each year prior to the annual fee due on 1 July, whilst this year also saw the anticipated announcement from ESMA related to third-country passporting under AIFMD, which may have stalled fund activity temporarily. The reduction in the value of regulated funds under administration reflects downward revaluations in Equity funds and Specialist Hedge funds. Currency revaluations had a negative impact, whilst pleasingly, slight increases were seen in the value of regulated private equity and real estate Funds.

“In addition, company formations increased by 2.7% year-on-year. There are now 33,425 live companies registered in Jersey, the most since September 2010, reflecting a healthy corporate environment. Against this backdrop, Jersey’s finance sector is keeping a close eye on global economic developments and is well placed to deal with future market challenges.”