At long last, the US is set to relax its borders for European travellers in November, in a significant and welcome decision, as it looks to move on from the restrictions of the past year. Meanwhile, relaxing rules on British imported lamb might only be an ‘incremental step’ on the path to a more comprehensive trade deal with the US by the UK government, but there’s no doubt that the UK will be keen to ramp up its international trade network with key partners post-Brexit, including the US, the biggest trading country for UK exports – even if, for the time being, that seems some way off.
For President Joe Biden, the coming few months look set to be particularly busy. All eyes will be on the US in the lead up to COP26, with the President keen to flex the US’ muscle in tackling climate change. Add to that the ongoing passage of the hugely complex and major Infrastructure bill – a US$1 trillion bipartisan move to rebuild the US’ roads and bridges, create climate change resilience and fund new broadband initiatives – and it’s clear that the US political and economic landscape is going to be fascinating over the coming months.
Forecasts predict that US growth will slow slightly in Q3 this year to 5.5% (from 6.6% in Q2), but that overall annual growth will come in at 5.9%. Although this is a slight downgrade on previous forecasts, it’s still a fairly punchy outlook given the impact of the Delta variant and persistent uncertainties and volatility in the markets.
All of this carries great relevance for IFCs like ours. Here in Jersey, we have increasingly strong connectivity with the US and a growing client base in the country. And we are living through a period of unprecedented economic, social and political disruption, all of which impacts on international investments. The shifting narrative in the US is a case in point. Against this backdrop, asset managers are undoubtedly looking for world-class financial expertise to help them navigate this changing landscape.
We’re now marking the second anniversary of the opening of our New York office. It’s a good time to reflect on just how far we have come in building relationships. When we established our office in 2019, it was a very different world of course. But our message has stayed consistent over that time – that Jersey is a stable, efficient, no-nonsense platform for enabling US fund managers to access the European investor market. It’s a proposition built on Jersey’s expertise in the alternatives space, and on its tried and tested ability to market funds both into the UK and EU through private placement routes under AIFMD.
Since 2019, we’ve focused on developing relationships with the US intermediary community to deliver our message. We’ve achieved that through a series of focused events and by bringing new thinking to the US market via a range of thought leadership reports, focusing on themes including fund domiciliation and ESG. We’ve also worked hard to deliver a set of tools to support US fund managers – the changes to our Limited Partnership legislation last year are evidence of that, enabling smoother, quicker relocation of LPs to Jersey from elsewhere.
We’ve been successful in our efforts too – we’ve had more than 15,000 US visitors to the Jersey Finance website, more than 20,000 views of US-focused video, and research presented to the US has been viewed almost 1,500 times.
All of this has translated into business wins. According to Monterey Insight figures, for example, in 2020, we saw record level of inflows from the US, with Jersey-based fund promoters from the US growing 17.3% over the year (to June 2020) and 41.2% over the past two years. In terms of the number of funds from US promoters, this is 36.7% growth year on year and 50% over two years.
The massive operational upheaval presented by Covid-19, as well as uncertainty in terms of EU investor access due to Brexit, has reinforced the need for robust, resilient structures and domiciles. As US managers search for reassurance, our core message of certainty has resonated well with US managers. Substance requirements have also played out well for Jersey, with certain other jurisdictions, that have traditionally been home to US funds, playing catch up in terms of complying with these requirements.
Recognizing that the US alternatives market alone is larger than the rest of the world combined, our efforts don’t stand still. We’re continuing to enhance Jersey’s proposition – there are plans to bolster Jersey’s regime for US managers further still through new significant legislative developments.
There will certainly be market opportunities to capture, as the US focuses on its programme to ‘build back better’. There will be a need for funds to raise capital to take advantage of Covid restructuring opportunities, resulting in a projected increase in fund launches. Jersey is well placed to play a role here and, in particular, to support those US managers looking to establish their first funds.
Over the coming months, we’ll be delivering those messages across our US network, through further projects and a range of key events for US audiences. We’re delighted to be a lead sponsor of AIMA’s annual Global Investor Forum, and we will again partner with IFI Global for their next e-seminar, entitled ‘ESG Evolution – Developing Industry Support’. We’ll also be hosting a Funds breakfast event in December – and we have lots of exciting plans for next year.
The environment is certainly an evolving one for the US but, with US managers continuing to value simplicity, certainty and effective solutions, Jersey is perfectly positioned to assist.