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Volatile market conditions and global regulatory uncertainties are requiring trustees in the Channel Islands to focus more than ever on their relationships with investment managers, according to panellists at a recent conference hosted by Brooks Macdonald in the Channel Islands.
During a panel session entitled ‘Spotlight on Risk’ at the ‘Brooks Macdonald Fiduciary and Investment Conference’, held on 28th April in Guernsey and 29th April in Jersey and attended by more than 100 senior trust and investment professionals, panellists agreed that market conditions and changes in regulatory standards have meant trustees are increasingly having to “educate” beneficiaries about investment risk.
Speaking on the panel, Adrian Kemp, Managing Director, International at Brooks Macdonald, said: “Relationships between investment managers, trustees and beneficiaries are so important now. Everyone’s risk profile will differ, so it’s about knowing a client inside out. For that reason, for trustees, knowing the investment manager is absolutely vital if they want to steer a course safely through unchartered waters.”
Meanwhile, Kevin Boscher, Director - Chief Investment Officer, International, at Brooks Macdonald, pointed to a generally uncertain year ahead in the investment markets: “Markets did rally in February this year due to central bank activity, but our view is that we are still a long way off a ‘normal’ cycle at the moment. China is focused on short-term growth at the expense of long-term success, whilst the US Federal Bank needs to realise that the dollar is crucial to global success. Overall, an overload of national debt globally is tending to result in a lack of investment activity and, whilst we do see some good returns in equities and good value in emerging markets, careful selection is very much the order of the day.”
In a further talk on private equity investment in the trust sector, Jonathan Smith, Partner at Wyvern Partners, highlighted that there have been 17 consolidations in the Channel Islands trust sector since 2003 and that the sector offered an attractive investment for private equity houses. With more than 100 trust and fund licenses in each of Guernsey and Jersey, he also suggested that more public listings involving trust companies could be expected in the comings months as a credible alternative to private equity investment.
Commenting on the conferences, Tim Dallas-Chapman, Director at Brooks Macdonald, said: “Our Guernsey and Jersey offices are spearheading the Group’s international growth strategy, which includes building business in Europe, the Middle East and Africa, so it was pleasing to see so many trust professionals at our conferences with clients in those regions looking for specialist investment support.
“What came across clearly from our speakers is that global markets are far from stable and that regulatory change is instilling uncertainty in the minds of trust company clients. However, the expertise built up in the Channel Islands combined with their strong regulatory environment is continuing to prove attractive to overseas investors. The key now will be for investment managers, trustees and beneficiaries to maintain strong relationships. If we can do that well then the Islands will benefit from a flight to quality.”
