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Hedge Funds in Monaco

A couple of months ago, I served as the opening day chairman for the GAIM conference in Monaco and gave a speech on capital raising.  This is one of the largest hedge fund events of the year and the fact that it is held in Monaco is no coincidence.  Monaco has a quickly expanding hedge fund sector and is home to many wealthy investors.  In the following video recorded in Monaco, I talk about the hedge fund industry in Monaco.

Video Transcript/SummaryThe strategies and tips provided within this video module include:

  1. The biggest and oldest hedge fund conference in Europe takes place in Monaco.
  2. There are many family offices and investors based in Monaco.
  3. Monaco is a hub for ultra-high net worth individuals even more so than other European cities.
  4. There are very low taxes in Monaco making it very attractive.
  5. Monaco is outside the scope EU Hedge Fund Directive because it does not belong to the European Union.
  6. There are relatively few hedge funds based in Monaco, but there are many managers and investors that live there.

Transcript for Hedge Funds in Monaco

Hello, this is Richard Wilson. I want to share with you a short video on the state of the hedge fund industry here in Monaco. I just got done speaking at the Game 2011 Hedge Fund Conference. It’s the biggest and oldest hedge fund conference in all of Europe. There’s about 800 people there, 300 investors, about 500 fund managers of different types and it’s a great conference. A lot of it is based on capital-raising to get an advice directly from investors. And I learned while meeting with family offices that are based here in Monaco and going to the conference and being here for a week, a lot about the cities. I just wanted to share with you what the hedge fund industry is like here in case you wanted to possibly move your hedge fund to Monaco or try to raise capital for Monaco. I thought it might be helpful just to share what my experience has been here in the city.

So first of, this is a hub in Europe for ultra-high net worth individuals. I say ultra-high net worth instead of high net worth because the cheapest studio condo here cost about 1.2 million Euros or about 1.6M, 1.7 million US dollars to buy and that’s a tiny, tiny little condo. So you have to have a lot of money to buy a place here. The result is that a lot of family offices, people who have sold businesses, people that run large multinational businesses and like I mentioned single family offices are based here because there is zero taxation or very little taxation based on how you’re classified by the Monaco government.

But most people pays Euro taxes or 5% taxes by living here, while in most other places you pay a lot higher taxes, like Switzerland. But Monaco is not part of the EU so they get to avoid the recent directive which came out, which affects EU hedge fund regulation, that’s another advantage for them. And I think the taxes across the world in first world countries are going to be raised and that places like this, Singapore, Switzerland, other tax haven areas are actually — you know going to greatly increase and people are going to realize they could run their fund or live in many places around the world as the world comes easier to move around in, to get more connected and these hubs are just going to grow more and more popular.

What I found out that’s surprising here is that although there’s not many hedge funds based here, there are just a lot of investors here and hedge funds loves to come here obviously because it’s so central in Europe and they can meet with investors so easily. From here you could easily get to Paris, you could easily get to Switzerland, you could easily get to Luxemburg or Italy obviously. It’s right next door to Italy. So it’s a pretty good location for being in when you’re capital raising, you know city targets.

A couple other interesting facts, is that Monaco is only 0.7 square miles. It’s the smallest city in the world except for Vatican City. Another thing that I didn’t know before I came here was that basically, since 1996 hedge funds have been focusing more on being based in Monaco but the main reason they have and opened up offices here is that their operational cost would way up. If you’re hiring somebody who has 5 years or 7 years in capital raising experience or risk management experience, their knowledge might be really valuable and your hedge fund might be making a lot of money, but you’re going to have to pay them twice as much as if you lived in a Geneva or Zurich or some other cities such London or even New York because that’s how much higher the real estate cost are here.

So the result is that lost of hedge funds come through the city, people come here every year for a Game obviously like I was this week. But it’s really more of an investor hub than an active hedge fund manager hub unless the hedge fund manager has already cashed out or has gotten to a huge size and they’re just here for a part of the year.

So I hope you enjoyed this video on Monaco. It’s a great place to come visit, great place for your business, great place if you’re looking to connect with investors and it’s a great place to come check out Game if you have time one year. Thanks for joining me. It’s Richard Wilson and we’ll see you again next time.

The hedge fund industry in Monaco is quickly expanding because of its huge reach for hedge fund investors and I expect hedge funds to continue to focus their capital raising efforts on Monaco.

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