Feeder fund structure
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I provided the information in the article below to inform you about the various jurisdictions in which offshore hedge funds will be established. Please note that the driving considerations for establishing an offshore hedge fund will be tax efficiency (both the structure and jurisdiction should be discussed with your attorney), preference and perception of manager and prospective investors and the cost of establishing the fund in the various jurisdictions. Your attorney should discuss these items with you when you consider in which jurisdiction to establish your hedge fund. Stand alone hedge fund structure A BVI Approved Fund is another low-cost fund vehicle which allows a manager to bring together a small number of investors on a longer-term basis. This fund is cost-effective and designed to avoid the regulatory burden when establishing a small fund. An Approved Fund is restricted to:
Stand alone fund structure
We are seeing an increased interest in offshore investment funds as managers look for ways to increase their investor base. Below will touch on why a fund manager would look to set up an offshore investment fund, the various organizational structures of an offshore investment vehicle and the most popular offshore jurisdictions and their similarities and differences. Offshore Fund Structures “Stand-alone and umbrella funds have the same level of governance requirements, which means that both sets of trustees have the same legal liability,” said Ndlovu. “But a stand-alone fund usually does not have professional trustees, since they tend to be company employees. If that is the case, the question then becomes whether they’re able to stay up to date with the latest legislative requirements. Are they qualified to make the right decisions about investments? You can outsource those responsibilities, but you can’t abdicate them.”
Organizational structure
Cayman hedge funds can be established as stand-alone vehicles or as parallel funds, feeder funds or co-investment vehicles to address the particular needs of investors in the fund structure. They are commonly found alongside the Delaware limited partnership in hedge funds seeking commitments from both US and non-US investors. Best Accounting Firm For Emerging Funds This entails that feeder funds do not have to stick to a specific master fund but can function legally as independent entities with the ability to invest in numerous different master funds.
Wealth managers offshore fund structures
A master-feeder structure is normally used where there is a US presence and where a single manager is seeking investment from both US and non-US or tax exempt US investors. The structure will comprise a master fund (an offshore vehicle which is either a limited partnership or a corporate vehicle which elects to be treated as a partnership for US tax purposes), which conducts the trading, and at least two feeder funds which invest all of their assets into the master fund. Other considerations It is vital that U.S. fund managers consider the impact the structuring of an offshore entity could have on the tax implications of the incentive allocation they received as compensation for their trading on behalf of the fund. For most U.S. fund managers, it is most tax efficient to recognize the incentive allocation as a reallocation of capital, as opposed to a fee, either in a domestic master fund in the case of a mini-master structure, or in an Offshore Master Fund in the case of a master-feeder structure.
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