“Over the last decade, Malta has experienced significant growth in the fund industry. This is reflected in the number of funds registered in Malta, which only consisted of two funds in 1995, have grown to 512 to include funds domiciled in Malta and those approved for distribution under the single passport (UCITS Schemes) with a total net asset value exceeding 4.2 billion euros as at 31 December 2005.”

This was announced by Kenneth Farrugia, general manager of Valletta Fund Management Limited in his address at the recent MBB seminar held at the Westin Dragonara Resort in March.

In his address on the topic “Fund Management: Challenges and Opportunities for the Local Investment Services Industry”, Mr Farrugia delved on the decade of challenges and opportunities that were encountered by the industry throughout its 10-year history, the new opportunities that are emerging as well as the various challenges that are being faced by the local fund management services industry in general.

Mr Farrugia explained how following the setting up of a regulatory framework in 1994, the Bank of Valletta Group was at the forefront of the fund management industry through the setting up of its own fund management company, Valletta Fund Management Limited that back then, consisted of a strategic alliance between Bank of Valletta and Rothschild Asset Management.

“Looking forward, the core business opportunities include pension schemes, captive insurance, fund administration and trusts. The trusts market is still at its early stages however, Malta's trust law is already comparable with international best practice and this augurs well for the further development of this business. Likewise, fund administration, brokerage and custody services are also positioned for strong growth going forward. On an international perspective, domestic operators may also register local funds as UCITS schemes in Malta that will allow them to distribute their products outside Malta under the single passport.”

Referring to the challenges being faced by the local industry in general, Mr Farrugia reiterated the “importance to keep developing a sound regulatory framework. Marketing Malta outside our shores is also another challenge. Malta is relatively a new entrant in the international financial services market so we need to address a very evident set of needs in this respect.

“Just to cite few issues, we require a well-articulated marketing strategy with a clear value proposition. Such proposition should be driven by our core strengths and reflect our comparative advantages. We also need a well-structured marketing plan aiming to target both the business gatekeepers and also potential operators. Of equal importance is the need to ensure that perceived concerns such as the legacy offshore structure are appropriately addressed.”

“Malta also needs to ensure that it has an adequate and constant supply of a skilled labour force that is conducive to attracting renowned and established international brands to start operating from Malta,” Mr Farrugia added.