The development state of the investment fund industry in Malta

Abstract

The investment fund industry is considered as one of the major drivers that instigated growth in the financial markets of various countries. Malta being a member of the European Union also experienced this significant growth in its financial sector, and was able to acquire a reputation for being a European Fund domicile. The objective of this dissertation was to attain a better perceptive of the development state of the investment fund industry in Malta. Additionally, this study seeks for perspectives that could sustain extended growth and development in such financial sector. In order to achieve this objective the local scenario was analyzed. The data gathered shows that most of the growth experienced in the local fund industry was due to several factors. These include; the efficiency provided through the regulator, sound regulation found in Malta, the low interest rate scenario, the local tax treaties offered, as well as by having multilingual professionals working within the local financial industry. In-depth interviews were carried out with professionals within the local financial services industry. Such interviews were essential to reach the objective of this study. This is because through their knowledge and expertise, interviewees were able to provide me with sufficient and reliable information to accomplish reliable results. The interview constructed included open-ended questions; hence this entailed flexibility in exploring further ideas which were not considered in the beginning of the research. During the study importance was given to factors such as the structure of the investment fund industry, the performance of local funds as well as the competition being provided to market investment funds both locally and abroad. Additionally, the research then explored several factors that affect the local investor such as the investment behavior and the knowledge provided to the local population regarding investment funds and the mechanics behind them. This was due to the fact that if these were to be improved, Malta would encounter higher level of development through its investment fund sector. The research also sought to explore factors that require improvement in order to extend growth and development in such financial sector. From the research it was concluded that the investment fund industry in Malta is quiet developed in terms of the structure implemented. This is in view of the fact that Malta is very capable of implementing laws and regulations and provide for various jurisdictions within its fund industry. However, the study concluded that there are improvements to be made in order to experience further growth and development within the local fund industry. The findings from this study suggest that it all sums up to the level of knowledge of the local individuals within the investment fund industry. This is due to the fact that if individuals were to be more aware of the opportunities offered through the investment fund industry, the activity will increase, which would bring more innovative products to Malta, which will ultimately improve liquidity and diversification and will automatically lead to a better economical flow in the country.