markets & strategies
Deposits in offshore accounts and funds fell by 2.1% to E3,613bn, following poor market performance, according to research conducted by Datamonitor.
Michelle Gorman, financial analyst at Datamonitor, said: 'Continuing stock market contractions are partly to blame, having wreaked havoc on mutual fund portfolio values. There also has been increasing pressure on offshore centres to step up anti-money laundering legislation.'
In addition, when choosing an offshore account, proximity to home is a strong factor. European clients accounted for 84% of all deposits in Dublin, 72% in the Isle of Man, 63% in Guernsey and over 61% in Jersey, while US clients accounted for 62% of deposits in Bahamas and Asia-Pacific investors accounted for 48% of deposits in Hong Kong.
According to Datamonitor, growth in offshore deposits in the period 2002-04 will remain at roughly their 1998-2002 levels, growing by 2.8% compounded annually. Dublin will grow, while the Bahamas and the Netherlands Antilles will both contract over the same period.
Despite the downturn in offshore mutual funds in 2002, the market will grow at a compound annual growth rate of 4.4% between 2002-04. Bermuda and BVI will be among the fastest-growing centres, while the Bahamas will lag behind. Credit Suisse Asset Management's (CSAM) multi- manager team, headed by Robert Burdett and Gary Potter, has set up products to sell across the European Union (EU) from next spring.
The group has set up three Luxembourg-domiciled funds of funds ahead of EU member states having to adopt Ucits 3 rules as of April 2004.
These standardise the rules as to what constitutes a fund of funds and those that conform can be sold across the EU.
Robert Burdett, director of CSAM, said, at the moment, different countries have different rules, such as permissible fund concentrations within a multi-manager portfolio or underlying fund structures that can be held.
The three products are Constellation Global, a version of the onshore Constellation fund of boutique funds Burdett and Potter run in the UK, Balanced Global and Equity Europe.
The Constellation fund has assets of E8m and the other two have E1m each.
Burdett said CSAM anticipated continental investors would prefer a Luxembourg domicile over a UK one, which has led to the decision to set up offshore products.
The portfolios are sub-funds of a Luxembourg-domiciled vehicle; Credit Suisse MultiFund (Lux).
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