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The Cayman Islands. A place that the ordinary layperson would have never heard of, but in the alternative investment funds industry, possibly the most popular offshore jurisdiction to base a fund in. A number of factors influence the choice of jurisdiction for hedge funds. This includes the type & profile of the investors, their expectations for governance-related matters and their familiarity and preference for specific jurisdictions. Cayman as the Institutional Gold Standard The Cayman Islands [...]

The first hedge funds were primarily national in nature. They served as a way for high net worth individuals and institutional investors to diversify their portfolio and exposure, by investing into funds deploying unique or contrarian strategies. Over time, hedge funds grew from a regional phenomenon into a global alternative asset class. Hedge funds today are at the nexus of finance, law and regulation. In addition, their transnational nature entails complexities both in terms of [...]

Institutional investors (such as asset managers, pension funds, family offices) expect high standards for hedge funds, in terms of operational excellence and standard of governance. This extends to the safety and security of assets. In response to institutional demand and regulatory guidelines, prime brokers and dedicated providers started offering custodian services for the traditional asset classes.Unlike the traditional asset classes however, where legislation and regulations such as the Investment Advisers Act 1940 (introducing the [...]

There are a number of jurisdictions and structures available for consideration for a new hedge fund manager. Operational considerations and investor location may influence the choice of structure and jurisdiction, while other factors, such as political instability and legal system, may compel hedge fund managers to launch offshore. 1) Tax Neutrality (Double Taxation) & Transparency Hedge fund managers may decide to accept capital from investors based around the world. In this case, one structure that [...]

Starting a hedge fund not only requires working out what kind of investment strategy you’ll use, but also the particular way in which your hedge fund will be structured. There are broadly three types of documents that you will need to start a hedge fund: Fund-related Regulatory-related Fund Formation & Legal documents: There are 4 documents central to the fund formation process. The particular documents required depends on the type of structure used: Corporation [...]