ARTICLE · 02 DECEMBER 2005

Hedge Funds – a Cayman Islands Success Story

Charles Adams, Ritchie & Duckworth

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The Cayman Islands have become the leading offshore jurisdiction in the funds industry and are currently home to more than 6,500 registered open-ended funds and many unregulated closed-ended or exempted funds.

Cayman IslandsWealth Management

Alan De Saram

Introduction

The Cayman Islands have become the leading offshore jurisdiction in the funds industry and are currently home to more than 6,500 registered open-ended funds and many unregulated closed-ended or exempted funds. The majority of such registered funds are hedge funds intended for experienced investors and it has recently been reported that an estimated 80 per cent of the world’s hedge funds are registered in the Cayman Islands. This article briefly highlights some of the reasons for this success.

What Are Hedge Funds?

The term "hedge fund" was originally coined to describe a type of collective investment vehicle that employed sophisticated hedging techniques to trade in the corporate equity markets. Over time the activities of hedge funds have expanded so that today the term refers generally to investment funds that follow one or more alternative investment strategies and utilise return enhancing tools such as leverage and arbitrage.

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