Considerations For Canadian Managers Operating Non-Canadian Funds

Expanding Offshore

When a Canadian hedge fund manager has built up a successful track record using a domestic Canadian fund vehicle, as a logical next step it may wish to use the same investment strategy to attract international investment.

This will generally involve setting up an offshore fund structure. The Cayman Islands, in particular, have established themselves as a pre-eminent centre for this type of work, with the majority of the world's hedge funds being domiciled in the jurisdiction (estimates typically range between 70% and 80%). The Cayman Islands model, based on tax neutrality and professional efficiency, has been reviewed extensively by managers, investors and their advisors over the years and is regarded as a tried and tested solution, robust enough to withstand the challenges of the 2008 financial crisis and the subsequent market turbulence.