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There are a number of jurisdictions and structures available for consideration for a fund manager looking to start a hedge fund. 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. Balanced Regulatory Approach to Financial Services Established offshore financial centres such as the Cayman Islands and the British Virgin Islands have regulators 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. In this article, we will be examining which fund documents you may need to start a hedge fund.Broadly speaking, there are three types of documents that you will need to start a hedge fund: Fund-related Regulatory-related Fund Formation & Legal documents: There are 4 [...]

When it comes to forming an offshore investment fund, fund managers have a plethora of options regarding the legal structure of the fund. There are several key legal decisions to be made, including the choice of offshore jurisdiction, type of business vehicle and the fund’s fee structure. One such fundamental, albeit sometimes overlooked, fund formation decision is the choice between employing an open-ended and close-ended fund structure.  The fundamental difference between an open-ended and [...]

The Cayman Islands. A place that the layman may not have heard of, but when considering the best way to start an alternative investment fund, they're 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 [...]

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 [...]