Why Cayman Remains the Domicile of Choice for Hedge Funds
The investment fund industry has experienced phenomenal growth since it was regulated and the reasons the Cayman Islands is viewed as a jurisdiction of choice for investment/hedge funds include:
- market access;
- the availability of professional services;
- the flexibility afforded by the range of structures used to operate investment funds and hedge funds;
- positive investor perception;
- local infrastructure to support investment/hedge funds;
- availability of listing on the Cayman Islands Stock Exchange for Cayman hedge funds;
- geographic location and time zone; and
- the legal, regulatory and tax environment to support investment funds and hedge funds.
Specific advantages of the Cayman Islands as a jurisdiction for investment funds are:
- Professional service providers including accountants, attorneys, administrators and directors are readily available, giving investment/hedge fund promoters the assurance that they have access to high quality services regardless of the complexity of their products.
- The Cayman Islands has a high level of technological sophistication with first-class international telephone, facsimile, cable and Internet links via satellite. This allows the quick processing of transactions, and provides account information for a wide range of products and currencies efficiently and at a cost-effective rate to support investment/hedge funds.
- The Cayman Islands is well known for its close working relationship between government and private sector. This has created a business environment that is efficient and free of time-consuming bureaucracy for the investment/hedge fund industry.
- The Cayman Islands Mutual Funds Law is designed to be a user-friendly regulatory framework for hedge fund and investment fund managers underpinned by a principles-based approach. Regulatory and licensing procedures for Cayman hedge funds are straightforward and proportionate.
- Cayman has a well-developed and sophisticated legal and court system with ultimate appeal to the Privy Council in London. The legal framework permits flexibility and enables Cayman hedge funds and investment funds to participate in sophisticated investment techniques. These may include leveraging the portfolio, short-selling, investing in all types of securities and derivatives, and investing, without restriction, in any currency or instruments.
- Cayman is a “no-tax” jurisdiction; it has no history of taxation whatsoever and the country has no mechanism for taxation in existence.