Statistics compiled by the Cayman Islands Monetary Authority (CIMA) from over 7,000 funds regulated in the Cayman Islands during 2008—the height of the global financial crisis—provide evidence both of the effects of the crisis, and the industry’s tenacious strength.
Among the funds from which statistics were drawn, most of the key indicators reflect notably weaker performance in 2008 than in 2007. These include an 18% fall in subscriptions, a 42% increase in redemptions, close to 300% dip in net income and a 25% decline in net assets.
However, an aggregate ending net asset value of almost US$1.7 trillion, and the relatively low proportion of funds having to suspend trading (7% in 2008 compared to 5% in 2007), was evidence of the sector’s survivability. So was the consistency that funds maintained in terms of their legal and operating structures, investment strategies, and location of service providers.
The statistical review of fund performance in 2008 is captured in the third edition of CIMA’s annual Investment Statistical Digest, released today on the Authority’s website. The 7,325 funds aggregated in the publication, compiled by CIMA’s Investments and Securities Division (ISD), account for approximately 82% of regulated funds in Cayman.
“The Cayman Islands Monetary Authority continues to collate and publish aggregate statistical information on the funds industry in order to enhance transparency and extend global awareness of the structure and performance of the industry,” said Mrs. Cindy Scotland, CIMA’s Managing Director.
She added: “These are very valuable facts and figures. With the Cayman Islands estimated to have a major portion of the world’s hedge funds domiciled here, the information in the Digest provides a good gauge of what was happening in the global funds industry at the peak of the financial crisis.”
Mrs. Yolanda McCoy, Head of ISD at CIMA commented: "The 2008 edition of the Digest shows the turbulent year that funds dealt with globally. It also shows that, in spite of this turbulence, the industry remained robust. We saw that the top jurisdictions and regions were able to maintain their relative positions. Cayman remained the top jurisdiction from which fund administration services were provided for Cayman-regulated funds, with Ireland maintaining its second place. New York and London remained the top investment manager locations, North America and Europe remained the top investment manager regions.”
The data shows some shifts which could be attributed to the crisis. For instance, the proportion of funds with assets totalling US$50 million or less rose to 52% in 2008, up from 43% in 2007. Although the largest proportion of assets continued to be allocated to master funds, the dollar value of assets allocated to that structure decreased by 24%. The instruments that saw the largest falls in asset allocation were: short bonds, which fell by 75%; long equities, which fell by 56%, and long bonds, which fell by 53%.
Following on from trends seen in both 2007 and 2006, two investment strategies, Multi-Strategy (39%) and Long / Short Equity (22%), remained dominant in attracting the majority of assets, garnering US$1.034 trillion of the aggregate net assets of US$1.693 for funds that had a 2008 financial year-end and submitted by deadline the Fund Annual Return (FAR) for that year.
The dominant operating structure remained the master/feeder, whilst under the legal structure the Exempted Company continues to be the structure of preference.
The Investments Statistical Digest 2008 can be downloaded from the About Us/Publications/Investments Statistical Digest section of CIMA’s website: www.cimoney.com.ky.