The Bahamas is gaining momentum in the investment funds industry and the jurisdiction is valued globally in the trillions of dollars, according to a top attorney in that sector. Christel Sands-Feaste, a partner at Higgs & Johnson law firm, and global chair of the firm's securities and investment funds practice, stressed to Guardian Business how the legal community will play a significant role in the implementation of the SMART Fund Model (SFM) 007, a move that seeks to attract more Brazilian and Latin American-based investors.
"Many people downplay the fact that attorneys are on the front lines bringing business to the jurisdiction, in the same way as investment managers and bankers. As we encourage clients to utilize The Bahamas, we need innovative products and services that can be offered to those clients," she pointed out. "Certainly for attorneys like myself who practice in the investment funds and securities funds space, this latest SMART fund model is very important as a flexible but regulated tool that can be offered and integrated into client structures and used for funds with up to 50 investors.
And at the end of the day, one of our goals is to attract new business into the jurisdiction." Last week, the Bahamas Financial Services Board (BFSB) presented the new model in both Rio de Janeiro and Sao Paolo. The board's CEO Aliya Allen said the template represents a "major leap forward" in the sector's efforts to make itself more attractive to Brazilian managers and investors. According to Sands-Feaste, those in the investment funds industry are excited about the latest SMART fund model, because it is has a number of unique features.
"In this model, there can be a single investor unlike other SMART fund models which require a minimum of two investors. The minimum investment is US$500,000, so we hope to attract clients from jurisdictions where external investment is only permitted where it meets or exceeds this amount, such as Brazil," she noted. "Another feature is the ability to outsource the administration or the administrative functions to any reputable service provider on an as needed basis.
That means directors have the flexibility to select service providers in a jurisdiction of their choice based on considerations relevant to the investment fund, without being restricted to licensed investment fund administrators only." Like the other SMART fund models, the SFM 007 is a flexible investment vehicle that is suitable for small private client funds or start-ups. Investment managers seeking to establish a track record or private wealth managers, clients and families who want to invest in a Bahamian investment fund as a part of a wealth planning structure may use SFM 007.
"The beauty of the SMART Fund Model 007 is that you can have up to 50 investors," Sands-Feaste added. Despite progress made so far, Sands-Feaste shared with Guardian Business that two of the biggest challenges facing the industry have been brand visibility and product familiarity. However, she is confident The Bahamas has the ability to deliver and be on the cutting edge of investment fund products. "Clients in the investment fund space are more familiar with jurisdictions like the Cayman Islands or the British Virgin Islands.
In some instances, we are exposing clients to the Bahamian brand for the first time. We are also challenged with product familiarity." She continued, "I think we are holding our own and are out there elevating the profile of The Bahamas brand and our individual firm brands. I think the SMART Fund Model 007 is an important tool to have in our arsenal to grow the investment funds industry."
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