An aggressively regulated portfolio of investments that uses leading investment strategies such as leveraged, long, short and derivative positions in domestic and international markets with the goal of generating high returns. Hedge funds are often set up as a private investment partnership with a limited number of investors and require a very large initial minimum investment. Investments in hedge funds are illiquid, in case that they require investors keep their money in the fund for a minimum of one year.
Why the Cayman Islands? The Cayman Islands have a leading position in jurisdictions for fund formation with an estimated 80% of the world’s hedge funds domiciled there. At the end of the second quarter of 2015, there were 11,061 funds registered with the local regulatory authority (The Cayman Islands Monetary Authority (“CIMA”).
The most important advantage to establishing a fund in the Cayman Islands
- Non-public funds can be registered in as little as 3-5 days with CIMA and the vehicle of choice for the fund can be registered within 1 day prior to filing;
- Flexible statutory regimes, with an absence of exchange control provisions, that are well-established and relatively reliable cost;
- No restrictions on: investment policy, issue of equity interests, prime brokers or custodians;
- The legislative and regulatory environment is continuously evolving to strengthen the jurisdiction’s appeal for hedge funds in response to often changing market conditions;
- Cayman Islands is a tax neutral jurisdiction – there are no capital gains, income, profits, withholding or inheritance taxes attaching to investment funds established there.
Cayman is a British Overseas Territory and as such maintains all of the security and stability in under the British flag. The UK remains responsible for the islands’ external affairs, defence and their legal system.