First book on reality check of world leading offshore financial centres!

Hedge Funds

Investment funds represent one of the fastest growing sectors in the offshore world. While tax free roll up plays a role in the attractiveness of offshore funds, there are other (some more important) factors at work. As with all corporate trust and partnership forms, any of which can be used to structure an offshore investment fund, the assumption is that the fund will pay tax in the jurisdiction of investment and each investor will pay tax, if any, in the jurisdiction of his residences or ordinary residence.

One material factor attracting funds to the offshore jurisdiction is the fact that in many offshore jurisdictions, the focus on regulation of investment funds is on disclosure rather than investment restrictions. This type of regulatory regime works well and is perfectly appropriate for institutional funds, i.e. funds which are not public.

A common misperception of funds in the offshore world is that many of these funds are retail (what would be referred to as a typical ‘mutual fund’ onshore). However, in most offshore jurisdictions, the vast majority of funds are in fact of an institutional nature and
the funds do not fall within the realm of the typical retail investor.

Bermuda, BVI and the Cayman Islands are the main players in the offshore funds business in the Caribbean. In Europe, Dublin and Luxembourg are widely recognised as the market leaders.

The Cayman Islands has a significant share of the offshore hedge funds market. It is widely believed that at least 75% of the world’s hedge funds are domiciled in the jurisdiction.