Bermuda private fund assets & registrations rise in Q1 2020

Bermuda continued to see an increase in assets under management of investment funds located in the domicile in the first-quarter of 2020, while the number of private fund structures, a popular one in the insurance-linked securities (ILS) space, continued to grow.

The quarter was just when the global Covid-19 pandemic was taking hold, but Bermuda continued to benefit from assets shifting to fund structures domiciled there, at least in the private fund segment.

The “private fund” in Bermuda is a structure used for a strategy that has 20 investors or less and that does not communicate or advertise its strategy to the public anywhere.

These private funds have no minimum subscription amount and are excluded from some requirements under the Bermuda Monetary Authority (BMA) rules, such as avoiding the need to appoint specific service providers and the like.

In Q1 2020 the BMA reported that the total number of investment funds domiciled on the island fell to 608, from 638 at the end of 2019.

The decline in numbers of investment funds was largely driven by deregistrations and revocations of Institutional Funds and Professional Class A Funds, the BMA said.

The only category of investment funds that saw an increase in number during the period were the private funds, which increased from 165 to 173 registrations during the quarter.

The overall net asset value of investment funds located in Bermuda increased by over 4% during the period, ending Q1 2020 at $183.17 billion.

The private fund segment that has been growing in Bermuda includes funds operated by numerous insurance-linked securities (ILS) and reinsurance fund managers, with stalwarts of the ILS sector and reinsurance firms including AlphaCat Managers, Aspen, Elementum Advisors, HSCM Bermuda, Nephila Capital, Pillar Capital Management, Hiscox ILS, and RenaissanceRe among the ILS focused strategies registered under that category.