Walkers Fundamentals White Paper 2021 – Regional Update: Americas

It has been another twelve months in which the extraordinary has become the norm, the unthinkable the mundane. Lockdowns have oscillated between full, partial and non-existent. Offices, restaurants and borders across the globe have creaked open and slammed shut as the pandemic has continued to shape the way we live our lives. And yet, throughout it all, lock-up funds have continued to be raised: investors were wooed over Zoom, side letters were negotiated at kitchen tables and the universe of participants and stakeholders in the closed-ended funds industry repeatedly showed themselves to be nimble and flexible enough to keep the wheels turning.



Bermuda continues to be the leading jurisdiction for the creation, support and listing of insurance-linked securities (“ILS”) (with the Bermuda Stock Exchange having almost 95% of market share of global ILS listings) and ILS funds. Investors’ appetite for portfolio diversification and interest in this relatively uncorrelated alternative asset class that is also acknowledged as a sustainable development investment for ESG continues to grow and the total assets under management (“AUM”) of global ILS investment managers is approximately $100 billion. Many of the largest ILS investment managers have a physical presence in Bermuda.

Bermuda remains the third largest offshore jurisdiction for traditional fund products, in terms of number of funds registered, with a reputation for quality clients and innovative structures. The most recently released figures saw total net asset values increase to US$213.70 billion, representing a year to year increase for nearly all classes of funds as compared with 2020. As Bermuda already had   in place a robust infrastructure for funds that meet international standards, there were no changes to the asset management regulatory landscape during 2021.

The introduction of the new Incorporated Segregated Accounts (“ISAC”) Act legislation has been well received. This builds on the traditional concept of operating segregated accounts that have the benefit of statutory segregation between accounts, allowing a ring-fencing of assets and liabilities, but also introduces the ability for each account to have its own separate legal personality. During 2021, investment managers operating in the Digital Asset sector, benefited from the introduction of this new legislation and we saw various classes of funds set up using an ISAC as a corporate vehicle.

Bermuda fared remarkably well throughout the COVID-19 pandemic. The Government of Bermuda’s offering of a ‘Work from Bermuda’ certificate, which allows digital nomads and professionals who normally work from another jurisdiction, a 1-year pass to live and work on the Island instead, has proven extremely attractive with nearly 500 applications received by the Government of Bermuda   in 2021. The programme is very attractive for those stuck in cities with high infection rates, or working from a home office longer than expected, and is being structured for asset managers in particular.

In April 2021, as part of its strategy to foster sustainable, equitable growth in Bermuda, the Bermuda Business Development Agency, led by Government and in collaboration with the private sector, has launched an initiative to establish and promote the jurisdiction as the world’s climate risk finance capital.

Like many financial centres, Bermuda is also seeing a marked increase in private equity activity, and an increase in family offices, looking to take advantage of Bermuda’s safe and stable environment.


Bermuda’s vibrant Fintech sector is going from strength to strength. The sector includes a broad range of innovative financial products and services enabled by distributed ledger or blockchain technology, including NFTs and DeFi. Legislation such as the Digital Asset Issuance Act, the primary legislation for all digital asset offerings   in or from Bermuda, is aimed at prioritising regulatory certainty, investor confidence and compliance with international anti- money laundering (“AML”) standards. Notably, Bermuda secured an excellent endorsement from the Caribbean Financial Action Task Force when it issued a positive evaluation of Bermuda’s AML legislation and enforcement practices in early 2020.

The resulting surge of interest in Bermuda as a jurisdiction for Fintech businesses, means that the island expects to see more investors and venture capitalists looking to Bermuda for new opportunities, particularly given the regulatory certainty and transparency.

The British Virgin Islands

The British Virgin Islands (“BVI”) remains the second largest offshore jurisdiction for funds by number of funds registered. BVI continues to market itself as the jurisdiction of choice for emerging managers, and has developed a niche for crypto managers. The numbers show strong growth in this segment of the market. The number of approved funds has increased by an impressive 87% between Q2 2020 and Q2 2021. The number of incubator funds held steady over the period (these are subject to a 2 year term limit - the total does not reflect the number of launches within the year). Incubator funds have been particularly popular with crypto managers seeking to road test their strategy and build a track record. Incubator and approved funds are both limited to a maximum of 20 investors, but in return are subject to relatively few regulatory obligations.

BVI approved managers have also been very popular over the last year. BVI had 415 approved managers at the end of Q2 2021, an increase of 43% year-on-year. Legislative changes in other offshore jurisdictions have brought a greater focus on the BVI approved manager, which is a ‘regulatory-light’ product that is quick and cost-effective to establish and operate. In addition BVI continues   to host 284 investment managers with a full investment business licence, which shows the enduring attraction of BVI as a domicile for investment managers.

Legislation requiring the registration and regulation of closed-ended investment funds came into effect in 2020. The Financial Services Commission (“FSC”) had taken a sensible approach to the registration of closed-ended funds (known as ‘private investment funds’). It excluded broad categories of funds from the regime, including single asset funds, single investor funds, funds with ‘no external offering’ and joint ventures. From a standing start BVI had 224 private investment funds as at the end of Q2 2021. Private investment funds have drawn considerable interest from smaller managers (in particular those managing assets of US$50 – 100 million), and a good number of managers chose to migrate their existing closed- ended funds to BVI during the year. Private investment funds enjoy the usual benefits of BVI funds – relatively low Registry and FSC fees, a responsive and pragmatic regulator, no local audit requirements, no requirement for general partners or directors to register in BVI, audit waivers available on request, etc. A further attraction is the modern and flexible BVI limited partnership model, introduced under the Limited Partnership Act, 2017.

Looking forward it is anticipated the BVI government will introduce legislation in early 2022 to regulate virtual asset service providers for the first time. Updates are also anticipated to the BVI Business Companies Act. We anticipate another year of growth in the BVI funds market, which continue to attract managers from all geographies.


To read more from the series, please use the links below:


Sarah Demerling PartnerT +1 441 242 1525sarah.demerling@walkersglobal.com

Matthew Cowman Managing PartnerT +1 284 852 2208matthew.cowman@walkersglobal.com
Paul WaldronPartnerT +1 284 852 2249paul.waldron@walkersglobal.com

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