By Damien Fitzgerald, Head of Funds for Guernsey at ZEDRA
We believe these will be the top 5 concerns for UK Fund Managers in 2022.
1) Future generations expectations of sustainability
Environmental, Social, and Governance assets are on track to exceed $50 trillion by 2025. The immediate focus here is for the Fund Manager to work on a green recovery post Covid. Guernsey remains flexible to challenges but needs to offer longer term, net zero funds which is what investors are really looking for. New ESG disclosure requirements will prove a useful benchmark for investors to choose which fund managers they wish to partner with in the future. Guernsey is now one of the market leading jurisdictions including green fund accreditation and The International Stock Exchange TISE sustainable, a sustainable market segment enabling investing into environment, social and sustainable activities.
2) Fund raising challenges
Covid and its effect on travel, have had a severe impact on fund raising for both new fund managers and follow on funds. Whilst the larger funds continue to raise more and more, with the benefit of substantial dry powder, the disruption caused by Covid in forming new relationships has seen investors turn towards familiar names and locations to place their monies.
Guernsey is known for its innovation of fund products and continues to offer a critical mass of world quality and experienced fund professionals, including a high quality pool of non-executive directors who can assist with fund raising challenges faced by new or growing fund managers.
3) Resourcing constraints
A tight labour market, global skill shortage and the impact of wage increases are all acting as accelerators of change. A growing industry needs a growing batch of intake each year against a backdrop of a global ageing demographic. Unlike in prior years, students now do not wish to work for large companies, they wish to work for themselves and in something they have strong beliefs in. Fund managers need to tap into this mindset if they are to attract the best talent of today, whilst at the same time allowing flexibility for new hires to contribute themselves to the strategic plans of the fund manager.
4) Diversity and inclusion
Focusing on the “S” within ESG, if fund managers and funds wish to stay competitive they need to offer diversity and inclusion. Consumers choose brands for their approach to ethics, impact on the environment and how companies react socially. Additional clarity and insight are needed on fund boards including diversity of thought, not just based on age, sex or race but also school upbringing eg free school meals being a factor now being considered in the market as a different method in choosing diversity. Reverse mentoring in fund managers is seen as one useful option in getting fresh ideas from new generations into investment options under consideration.
The Institute of Directors Guernsey branch annually support a school shadowing programme, whereby students shadow finance leaders in an effort to fast track future generations of business leaders.
5) Macro challenges
Inflation risk and supply chain issues remain a concerns as we approach 2022. Fund managers continue to focus on the sectors and subsectors where their experience adds most value. In turn, investors look to fund managers to justify their rewards against such macro challenges. Guernsey offers a range of fund products to suit all requirements as well as numerous options in terms of structuring and authorisation / registration of vehicles to offer flexibility on these changes.