Barbados Offers High Quality Investment Management

“Whether you are investing for a captive insurance company, trading company, offshore bank, family office – or yourself personally – you can find an investment manager right here ...”

By Peter Arender, CFA

January 5, 2012

Port St. Charles

It has been rough sailing for investors in recent years. Owning equities has certainly not been a smooth ride and most bond markets are offering discouragingly low yields. In response, investors are now seeking greater global diversification and access to more complex strategies to achieve their objectives. Many companies’ and individuals’ investment-related requirements have grown, making convenient access to high quality investment services more and more important. Thankfully, this is an area in which Barbados can increasingly satisfy a wide range of needs – for companies and individuals alike.

Investment Management

A number of investment management firms offer services related to regional and global markets. These run the gamut from mutual funds to segregated portfolio management to advisory services that sit atop platforms of global products and hedge funds that would rival those anywhere in the world. Barbados’ standing with the Organisation for Economic Co-operation and Development (OECD) means that firms here can access offshore and onshore vehicles in most jurisdictions on behalf of clients.

For corporate and individual clients who have experience in North America or Europe, there is the kind of choice that might remind them fondly of home. Firms range in size from small, independent hedge funds to representative offices of the large Canadian banks. Whether you are investing for a captive insurance company, trading company, offshore bank, family office – or yourself personally – you can find an investment manager right here, or tap into your Barbados advisor’s network of external managers to meet your objectives.

And often the professionals looking after the portfolios are not on the other side of the world.

More and more investment management activity is being done right in Barbados, where clients can have easy, direct contact witih the people making the decisions.

Pension Plans

In keeping good employees happy over the long term, an appropriate pension plan can be essential. Barbados has longstanding pension legislation that helps both onshore and offshore companies and their employees invest for retirement. While there are still many defined benefit pension plans operating, most new plans are moving to a defined contribution model where each employee selects appropriate investment vehicles and assumes the risk of how they perform in the future. Usually these investments
are simple combinations of local mutual funds, suitable for an individual’s risk tolerance and time of life.

“Companies want to focus more on their actual businesses and less on the day to day running of a pension plan. We try to make it easy for the company and the employee,” says Rene Delmas, pensions director at Fortress Fund Managers.

In addition to local pensions, Barbados is among the jurisdictions recognised by the UK for establishing Qualifying Recognised Overseas Pension Schemes (QROPS). This means UK expatriates can enjoy portability of their existing pension plans and some potential benefits from tax planning. Barbados has no capital gains or inheritance tax.

Barbados for Investment Managers

Investment managers, no matter where they are located, typically have a few key requirements of their home base. These include access to well-trained and qualified employees, good telecom and information technology services, capable administrative support and a judicious regulatory and tax

The investment community in Barbados is made up of a range of professional roles. The “buy side” of analysts and portfolio managers is well represented and there is a niche of investment bankers and stockbrokers that work in regional and global markets. The local Chartered Financial Analyst (CFA) society has approximately 60 members and puts on a range of investment-related programming throughout the year.

“Over time, the expectation is that Barbados will be home to more and more qualified and experienced investment professionals,” says Charles King, an investment manager and president of the Barbados CFA Society.

If Internet connection speed is mission critical for your business, these needs can be met. Barbados is home to some investment firms that continually rely on split-second interactions with stock, option and commodity exchanges around the world. There is already critical mass in the eyes of many service providers. Representatives of the major data vendors such as Bloomberg make regular trips to Barbados to meet with and instruct their clients here. Fund administration services are offered in Barbados for funds in any number of domiciles. Fund administration companies are licensed and regulated by the Barbados Securities Commission.

On the taxation front, a large and growing network of double taxation treaties means withholding taxes on dividends from most major countries are at preferential rates for Barbados-based entities and individuals.

Since Barbados is not a major financial centre like New York or London, it does have some challenges for investment management companies that would be worth bearing in mind. The pool of investment professionals, for example, is not yet comparable to that of a large city in North America or Europe, so key hires can sometimes be challenging. Government services critical to financial services regulation and immigration are not yet as streamlined and proactive as they could be. But movement is generally in a positive direction, and we should expect continued improvements to the already significant foundations in place. As with sailing, good local advice can make navigating new harbours easier.

Barbados already has much to offer growing businesses that rely on high quality investment services and this should continue to improve over time. It also has much to offer a small but growing community of investment managers that choose to call Barbados home. Whether the investing future brings us stormy seas or smooth sailing, the way forward can be charted from right here in Barbados.

Peter Arender, CFA

Fortress Fund Managers is based in Barbados. Its range of funds covers the asset classes of equities and fixed income, providing creditable performances over the years. Fortress is also a leading provider of pension management and administration services to companies of all sizes, and to individuals.

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