Local Funds Industry-jostling for a superior ranking

Source: George M. Mangion¸ PKF Malta

As published in the Sunday Independent on the 23rd December 2012

The island is seemingly poised to win business from more-established fund jurisdictions¸ benefiting from a growing demand by investors for transparency as well as from rumours among hedge funds that the EU was becoming increasingly hostile to firms based outside of it. Our international ranking sees us as being the 12th soundest banking system and 15th position in Financial Market Development (World Economic Forum’s Global Competitiveness Report 2011 – 2012¸ 142 countries reviewed). Just consider the meteoric trajectory of the industry that in 1995 there were only 5 Collective Investment Schemes (CIS) licensed¸ this increased to more than 700 today. In his comments to Bloomberg¸ Prime Minister Lawrence Gonzi says he worries whether Malta has enough accountants and financial analysts to keep up with demand¸ adding that government wants the island to be a financial centre of the highest reputation possible aiming for financial sector to become a pillar of the economy¸ reaching 25% of GDP by 2015.

So if you choose to set up a fund in Malta what are the advantages for the consumer? The answer is that the benefits are numerous but regrettably the average investor is not fully versed with these benefits. Solid diversification and spread of risk¸ professional research¸ and access to timely information are just some of the advantages. Simply put¸ the main benefit of professionally managed funds is that they provide access to an investment that offers numerous  opportunities that the individual investor would otherwise not have been able to access. Additionally¸ the increased variety of managed funds available to consumers ensures that the personal requirements of each individual investor may be met. Whether high risk/high capital growth investments or the low risk investment provides consistent income over a period of time¸ managed funds offer solutions for almost every investor. To start with¸ while the consumer may indeed be able to invest through their broker internationally¸ using a managed fund means assessing the range of experts to help you invest in the best possible international investments¸ guided by the funds’ predetermined mandate.  Continuing on the advantages of using Malta as a hub for Funds one can mention that EU membership and the subsequent adoption of the euro are also a effective catalyst for attracting funds with the added advantage of EU passporting rights for UCITS and PIF’s. As a result¸ more offshore fund managers are expected to move into regulated onshore jurisdictions or base at least part of their operations in the EU. Another feather in our cap is the competitive taxation regime for collective investment funds (“CIS”) (including Professional Investor Funds -PIFs and UCITS). As stated earlier¸ the number of funds located in Malta has in fact grown to more than 700 with €8 billion under management but although it’s not much compared with Luxembourg – which has more than €1.4 trillion under management we keep trying to catch up. Peter Hughes¸ group managing director in London for Apex¸ says Malta has a competitive advantage as a hub for international fund administration companies. Apex has offices in some 23 countries¸ including Malta. He is convinced the charges to set up a fund management