Cayman Islands Hedge Fund Administration
Cayman Islands Hedge Fund Administration is the core of what we here at Charter Group Fund Administration do. Contact us to find out more
Definition of Mutual Fund
The definition of a mutual fund, as established under the Cayman Islands Mutual Funds Law, includes the following:
A mutual fund is any company, trust or partnership incorporated or established in the Cayman Islands, which issues equity interest redeemable or re-purchaseable at the option of the investor, the purpose of which is the pooling of investors’ funds with the aim of spreading investment risk and enabling investors to receive profits or gains from investments.
Note that funds commonly referred to as hedge funds fall within the definition of a mutual fund and are thus covered by the Mutual Funds Law.
Common Fund Vehicles
The Cayman Islands has company, trust, partnership and related laws that allow a high degree of flexibility for establishing mutual funds. The four vehicles commonly used for operating mutual funds are:
Exempted Company – The exempted company may redeem or purchase its own shares and may therefore operate as an open-ended corporate fund.
Segregated Portfolio Company – An exempted company can also be established as a “Segregated Portfolio Company” (“SPC”) with protected cells or portfolios. The SPC makes it possible to provide a means for different groups to protect their assets when carrying on business through a single legal entity.
Unit Trust – The unit trust is usually established under a trust deed with the investors’ interest held as trust units.
Exempted Limited Partnership – The exempted and limited partnership provides a second unincorporated vehicle and it can be formed as easily as the exempted company or the unit trust.
The Cayman Islands is the principal offshore jurisdiction for hedge funds. It is attractive as a domicile for funds because it is supported by a fully-developed business law, an English-based legal system and a regulatory and professional infrastructure capable of implementing large and complex international business transactions