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The recent Opalesque Roundtable in the Bahamas shed light on the jurisdiction's innovative fund structures, highlighting their adaptability and forward-thinking approach. Industry leaders discussed key developments in the Bahamas' fund offerings, emphasizing their ability to meet evolving investor needs.

The Roundtable PDF can be downloaded here for free: https://www.opalesque.com/RT/RoundtableBahamas2024.html

The SMART Fund: A Testament to Adaptability

Delphino Gilbert Cassar, Head of Business Development & Fintech at Equity Group, emphasized the versatility of the Bahamas SMART (Specific Mandate Alternative Regulatory Test) Fund. He noted, "The true robustness of a financial services product lies in how it can survive and adapt over time and actually across generations."

The SMART Fund, introduced in 2003, has proven its ability to evolve with changing market dynamics. Paul Winder, Global Head of Wealth Planning at Deltec Bank and Trust, elaborated on its flexibility, mentioning various templates designed for different strategies and investor types. For instance, the SMART Fund 002 caters to start-up managers, while the SMART Fund 004 is tailored for single-investor or family office structures.

Winder highlighted the SMART Fund's adaptability, citing its evolution during the global financial crisis and its potential applications in digital assets and tokenized securities. This flexibility has made the SMART Fund an attractive option for a wide range of investors and strategies.

Proposed Digital Asset SMART Fund

The Roundtable discussion ventured into new territory with the proposal for a SMART Fund specifically designed for digital assets and cryptocurrencies. Antoine Bastian, CEO of Genesis Fund Services Limited, mentioned a concept that had been pitched but not yet finalized.

Delphino Gilbert Cassar expanded on this idea, suggesting the potential for a new SMART Fund template that could incorporate elements of decentralized autonomous organizations (DAOs). He proposed that such a structure could "enhance governance by involving subscribers directly," allowing token holders to vote on fund direction and investment management functions.

Cost-Effective Innovation: Cellular NAV Calculations

Gilbert Cassar also highlighted an innovative feature of Bahamian fund structures: the ability to perform cellular NAV (Net Asset Value) calculations at the sub-fund level. This approach allows for the exploration of various strategies within an overall fund environment without the need to create entirely new funds. He emphasized the cost efficiency of this method, noting that "you can add sub-funds with a modest add-on fee" instead of incurring the full expense of launching a new fund.

ICON Funds: Small Changes, Big Impact

The Investment Condominium (ICON) fund structure, another Bahamian innovation, has recently seen small but significant amendments. Antoine Bastian noted that these changes now allow ICON funds to transfer or re-register from being an ICON to becoming an International Business Company (IBC), partnership, or unit trust.

Bastian emphasized the importance of this flexibility, particularly for markets like Brazil and other users of the ICON structure. The ability to convert to a more traditional structure without liquidating the fund and starting over adds a layer of versatility that makes ICON funds even more attractive to international investors.

Conclusion

The Bahamas continues to demonstrate its commitment to innovation in fund structures, adapting to the changing needs of investors and the evolving financial landscape. From the time-tested adaptability of the SMART Fund to proposed structures for digital assets and the enhanced flexibility of ICON funds, the jurisdiction is positioning itself at the forefront of fund innovation. These developments underscore the Bahamas' role as a responsive and forward-thinking financial center, ready to meet the challenges and opportunities of the next generation of investors.