Cayman Islands Investment Fund

With regulations designed to benefit both investors and fund managers alike, Cayman Islands funds are a popular offshore vehicle for global investors.

Global private equity funds, hedge funds, and hybrids are big businesses in the Cayman Islands. Thanks to its tax-neutral stance and the large number of financial services professionals operating here. Historical links to English common law as well as a stable legal, political and economic environment add to this attraction.

As the world’s top domicile for investment funds, the Cayman Islands is home to at least 70% of all offshore fund formations. Its venture capital, private equity, Cayman Islands hedge funds and other offshore financial instruments attract the cream of investors from across the globe.

Cayman Islands Investment funds can come in many forms and the majority are governed by the Mutual Funds Law, recognizing:

Open-ended/regulated mutual funds – Open-ended funds that meet the criteria of the Mutual Funds Law in the Cayman Islands can conduct business as a hedge fund, licensed mutual fund, administered mutual fund, registered fund, or master fund.

Closed-ended/exempted funds – Closed-ended funds tie an investor’s funds for the life of the fund and require time to mature. They are not regulated in the Cayman Islands and are popular with private equity and venture capital firms, real estate, and development. Exempted funds vehicles include the Exempted Limited Partnership, the Exempted Company, and the Segregated Portfolio Company, as follows:

Exempted Limited Partnership – An ELP investment fund vehicle can have multiple general partners, limited partners, as well as a corporation, with or without limited liability.

Exempted Company – An exempted company conducts its business outside the Cayman Islands.

Segregated Portfolio Company – An SPC separates assets and liabilities between portfolios as well as from general company assets.

Unit Trusts – A unit trust can be constituted by the trustee alone or as a trust deed executed by both a trustee and a manager and is typically exempted. 

The Cayman Islands has developed regulations designed to benefit both investors and Cayman fund administrators alike, allowing funds that are easy to establish and maintain in the Islands.

Determining the type of fund that’s best for you, your financial situation and your investment goals require careful consideration. As with all matters financial and legal, consult the experts before making any commitment and ensure your consultant has the relevant experience, a solid reputation, and comes recommended by existing clients.