What Are Offshore Hedge Funds?

Offshore investments have been widely spiking globally, attracting millions of investors. Investment proceeding in the offshore jurisdictions allows the business investors to invest in a wide range of available investment options to capitalize their funds.

In general, offshore investment refers to investments made outside the national boundaries. Over the years, the count of offshore funds has been increased as they can be easily operated outside the scope of government regulation.

One such division of offshore investments is offshore hedge funds, which is a profitable and smart move. This guide outlines the essentials regarding offshore hedge funds, which you need to know before investing.

Let's have a look at the basics and understand what its structure and other essentials all about follow an offshore hedge fund.

Offshore Hedge Funds

Hedge funds are a type of offshore investment fund that engages in the trading of relatively liquid assets and extensive complex trading.

In simple terms, a hedge fund can be called as a pool of money that is contributed by the investors. It is run by a fund manager whose end goal is to eliminate the risk and maximize the returns.

In most cases, business investors prefer to make investments in the popular offshore jurisdictions that turn out to be a profitable one.

The key characteristics of offshore hedge funds involve the following:

  • Accredited to only qualified investors
  • Broader investment perspective as compared to other funds
  • Provides high leverage returns
  • Private investment vehicles to protect assets and multiply funds

Moving on from the characteristics, there are multiple benefits of proceeding for offshore funds which include the following:

  • Provides a high level of tax-exemptions
  • Maintains a high level of anonymity
  • Flexibility to proceed with Master Feeder

Structure of Offshore Funds

Talking on the offshore front, the hedge funds are driven by three primary vehicles, namely, companies, unit trusts, and limited partnerships.

Offshore Companies

When it comes to offshore funds, most of the business entity prefers the structure of a Limited Liability. The companies turn out to be one of the driving vehicles when it comes to offshore investments for both open-end and closed-end funds.

Offshore Unit Trusts

The second structure is the offshore unit trusts that follow the structure of a mutual fund. Here, all the unit trusts stand as open-ended, and the assets that are held by the unit trust includes property, securities, mortgages, cash equivalents, etc.

The unit trusts play the role of a one-stop-shop for the investors allowing them to build and diversify their portfolio across various investment platforms.

Offshore Limited Partnerships

When it comes to the third structure, the Limited Partnerships are mostly preferred as the business structure divide the ownership and control.

Also, when it comes to offshore funds, most of them are LLC based in a tax-haven jurisdiction. It holds the flexibility to collate the onshore as well as offshore investors by using a structure called "master-feeder."

The master fund holds the total assets of the onshore and offshore assets providing a unified administration.

Best Jurisdictions to Invest for Offshore Hedge Funds

When it comes to investment in offshore hedge funds, it is recommended to proceed with tax-haven jurisdictions. Some of the preferred destinations for offshore hedge funds are:

Investing in offshore funds is a profitable and smart move, and today, most of the business investors prefer to proceed ahead to earn high-end returns.

To begin with, one needs to start with the incorporation of an offshore company, which is recommended to proceed with the guidance of experts.

A certified business expert can turn out to be a boon for your business and can help you to start your tasks securely. Here’s a guide on The Core Reasons for Hiring an Offshore Business Consultant, which will help you to understand the benefits clearly.

Business Setup Worldwide has been standing as one of the top ten business consultants in Dubai. To provide the best business incorporation services, we take the initiative of understanding the business needs and deliver tailored solutions accordingly.

The expert's team here holds industry experience, and thus are well-versed with the business setup services across various offshore jurisdictions.

If you are looking forward to taking a step further, feel free to have a word with our experts. Contact us today-we'd be glad to assist.

Categories: