Introduction
This article provides an overview of common structures for
investment funds in the Cayman Islands.
Investment funds in the Cayman Islands must be registered either
under the Private Funds Act or the Mutual Funds Act, depending on
whether the fund strategy is closed-ended or open-ended.
The key issue to consider in structuring a Cayman Islands fund
is liquidity. If the underlying portfolio of the fund is illiquid,
allowing investors to redeem when they want to may require
underlying investments to be sold prematurely to meet redemption
requests, affecting the ultimate performance of the fund. Such
funds should therefore be structured as closed-ended funds (i.e.
with no redemption rights being granted to investors). This allows
the fund to better manage the timing of the sale of its underlying
investments, maximising return to all investors. A PE/VC type fund
would typically fall within this category and would generally need
to be registered under the
