As Offshore Funds Grow, More Supervision Is Sought

Jan. 25, 2001 ( - Offshore fund activity hit about $1.43 trillion in 2000 and continues to grow as more mutual and hedge funds seek more flexible operating environments, often including beneficial tax treatment, to conduct their business.

Since 1978, the number of offshore funds has steadily increased from  around 641 to  8,691 funds in 2000, according to Micropal.

Based on assets under management, some of the most popular offshore sites worldwide are:

  • Luxembourg – $747 billion
  • Cayman Islands – $250 billion (and domiciling some 2,500 funds)
  • Dublin – $176 billion
  • British Virgin Islands – $60 billion (domiciling 1,500 mutual funds)
  • Netherlands Antilles – $55 billion
  • Bermuda – $46 billion
  • Jersey Islands – $39 billion
  • Bahamas – $35 billion
  • Guernsey –  $24 billion
  • Isle of Man – $4 billion

Among the largest multi-domiciled offshore funds (as of year-end 1999) are:

  • State Street Bank – $147 billion in assets under administration
  • Chase Manhattan – $140 billion in assets under administration
  • BIL – $102 billion in assets under administration
  • UBS – $101 billion in assets under administration

While offshore activity has continued to grow, organizations such as The Financial Stability Forum, (part of the Bank for International Settlements), published a study last spring calling for  increased supervision of offshore centers since they considered them to  raise “serious concerns on onshore supervisors about the quality of supervision in, and degree of co-operation provided by some of the offshore centers.” 

As a result, the Forum chided the offshore countries to increase their supervision and degree of co-operation with onshore regulators “as quickly as possible.”