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Why Launch a Hedge Fund Offshore?

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. Balanced Regulatory Approach to Financial Services Established offshore financial centres such as the Cayman Islands and the British Virgin Islands have regulators that create transparent and compliant [...]

Typical Documents Needed to Start a Hedge Fund

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 [...]

Open-Ended versus Closed-Ended Funds: The Difference Explained

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 [...]

Cayman Islands: The Biggest Offshore Jurisdiction for Hedge Funds

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 [...]

How to welcome US investors into your fund?

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 [...]

What Are Crypto Custody Solutions?

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 [...]

Crypto Hedge Funds: Stopping Rogue Traders and Asset Thefts

The immutable nature of blockchains prevent accidental transactions from being reversed, while the difficulty in tracing assets makes fund recovery a more complex process. Crypto developers and Foundations have generally been reluctant to fork to reverse investor or asset loss. Several controls incidents have already been reported in the crypto space. In one instance, a Chicago-based crypto hedge fund trader withdrew fund assets from an exchange and transferred it to his own account. There have [...]