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Malta as a Jurisdiction of Choice for UCITS Funds (not only hedge funds)

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It is an open secret that in recent years much of the increase in popularity which Malta has enjoyed as a fund domicile emanated primarily from the alternatives space, or, as more commonly known in Malta, the PIF [Professional Investor Fund] regime.

The attractiveness of PIFs, coupled with a flexible but robust regulatory framework, a competitive workforce, a cost-effective solution both at inception as well as on-going, and attractive speed to market, have allowed Malta to grow in importance and an inch closer to becoming a force to be reckoned within the global funds industry. It is safe to say that, bar any unforeseen events, the local PIF regime [including Alternative Investment Funds post the introduction of the AIFMD] should continue to be a popular choice for both EU and non-EU alternative fund managers.

But is this as far as it goes for Malta in the Funds business? Certainly not. As a Firm heavily involved in the local funds industry, we can safely say that, especially over the last 12 to 18 months, the number of enquiries we have received in connection with the setting up of UCITS schemes in Malta has increased dramatically. Of these a high percentage have translated into formal applications to the Regulator with a host of others currently in the pipeline. Unsurprisingly in most cases, if not all, we were competing for the business against the likes of Luxembourg and Ireland.

The Analysis of Collective Investment Schemes licensed by the MFSA 2014 [1] confirms the steady growth in the number of licensed UCITS Funds in Malta from 2006 to 2014. The Net Asset Value of Malta-domiciled UCITS Funds on the other hand expanded from €2.29 billion in December 2013 to €2.90 billion at the end of 2014.

Another key consideration is that, over the years, many local service providers have invested significant resources to acquaint themselves in quite some detail with the UCITS Directive and the implications thereof to allow them to service prospectives to the standards expected out of a mature domicile. As a result, Malta now boasts a significant pool of talent across the areas of legal, investment management, risk and compliance, custody and audit which are specialised in the various areas of UCITS structures like, for example, assets eligibility, investment, borrowing and leverage restrictions.

Malta’s challenge is now to replicate the solid reputation which it has built for itself in the hedge fund industry into the retail space in the hope that promoters will then identify in Malta a jurisdiction of choice for their retail funds.

This article was issued by Michael Galea, Managing Director of Calamatta Cuschieri Fund Services (CCFS) & Calamatta Cuschieri Investment Management (CCIM). This article was published on the Finance of Malta Insight Newsletter- September 2015.  The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. CCFS and CCIM has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing in this article.

[1]  Analysis of Collective Investment Schemes licensed by the Malta Financial Services Authority, MFSA 2014.