The House Wine Problem: What Fund Managers Get Wrong About Jurisdiction Selection

There is a moment in every fund formation when someone in the room says “we’ll just do it in Cayman” with the same energy someone orders the house wine at a restaurant they’ve never been to before. Safe. Familiar. Probably fine.

And like the house wine, it usually is fine. Which is exactly the problem.

Jurisdiction selection has become a habit dressed up as a decision. Managers reach for Cayman or Luxembourg not because they’ve evaluated the alternatives but because the last fund was there, the investors recognise it, and the lawyers have the documents on file. The actual question of what structure best serves this strategy, these investors, and this manager goes largely unasked.

Gibraltar is interesting not because it’s an obvious choice. Some managers never consider it. It’s interesting because of why they don’t, and what that reveals about how the industry actually makes decisions.