Cayman Funds Begin Bounce-Back
Friday, June 03, 2011

Newly released figures show that, while some of the negative effects of the global financial crisis continued to impact on the Cayman Islands' regulated fund industry in 2009, the year saw an upsurge in positive returns, and a substantial increase in net income.

Compiled by the Cayman Islands Monetary Authority (CIMA), the fourth annual Investments Statistical Digest is based on data submitted to CIMA, through the Fund Annual Return (FAR), by 6,938 funds with a financial year-end falling within the 2009 calendar year. On aggregate, these funds achieved an ending net asset value (NAV) of USD1.561 trillion.

According to CIMA, the Digest offers a snapshot of the industry’s response to the global financial crisis, and demonstrates increasing stabilization in the market during 2009.

Funds filing an FAR recorded a 147% increase in net income, reaching USD203bn, an impressive turnaround, given the net loss of USD429bn experienced the previous year. Gross assets saw a 9% return, also demonstrating a resurgence in comparison to the -17% recorded in 2008. This pattern was also repeated with a 13% return on net assets, up from 2008's -25%.

Nevertheless, as CIMA points out, the 2009 statistics also highlighted the continuing effects of the crisis. While the USD1.561 trillion NAV is certainly impressive, it remains 8% below that accomplished in 2008. In addition, total assets fell by 13%, to USD2.176 trillion. Investors departed funds to a lesser extent in 2009, with a 20% decrease in redemptions. However, this was unable to offset the fact that subscriptions fell by 41%, which CIMA believes reflects continued caution.

On the other hand, some aspects of the market remained unchanged. The proportion of funds having to suspend trading stayed at 7%, and, following on from previously recorded trends, two investment strategies, Multi-Strategy and Long/Short Equity, remained dominant. These attracted 37% and 22% of assets, respectively. Only two strategies showed an increase in the net assets allocated to them: Global Macro, which saw a 21% increase in net assets, and Distressed Securities, with a 22% increase.

Commenting on the data, the Head of CIMA’s Investments and Securities Division, Yolanda McCoy, said: “Collectively, Cayman-domiciled funds were successful in 2009, turning around some of the negative results from 2008. Although asset values and subscriptions were down, the strength of the industry is seen in the significant increases in net income and return on assets. Overall, Cayman domiciled funds remain resilient, with performance rebounding as anticipated.”

Cindy Scotland, CIMA’s Managing Director, added: “This aggregate statistical data that we are able to collate and publish in the Digest provides invaluable information. Not only does it give us as regulators a better understanding of the viability and developing trends of the industry as it evolves year to year, it extends the transparency of the industry to all stakeholders who have a vested interest.”