Foreign investors are attracted to set up a mutual fund in the Cayman Islands due to its favorable regulatory environment and tax benefits for international entrepreneurs. The Cayman Islands Monetary Authority (CIMA) oversights the investment funds, which can be categorized as open-ended or closed-ended. The jurisdiction offers a range of fund vehicles used for operating mutual funds, such as the Cayman Islands exempted company. We assist in opening a mutual fund, including the preparation of documents and the registration process.
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Regulations for mutual funds in the Cayman Islands
The Mutual Funds Act (MFL) assigns regulatory responsibility to CIMA for certain categories of funds operating in and from the Cayman Islands. Investors looking to open a mutual fund in the Cayman Islands will have to respect these regulations. However, not all mutual funds are regulated, as exemptions exist based on specified criteria outlined in the MFL. The supervision of funds and administrators is done by CIMA’s Investments Supervision Division.
In setting up a mutual fund in the Cayman Islands, regulatory measures are aligned with international standards established by entities like the International Organization of Securities Commissions (IOSCO) and the Offshore Group of Collective Investment Scheme Supervisors (OGCISS).
Our agents can provide more details regarding the Cayman Islands incorporation process for mutual funds.
Categories of mutual funds in the Cayman Islands
There are different categories of mutual funds in the Cayman Islands, with specific regulatory requirements. These categories are the following, as explained by our Cayman Islands company formation specialists:
- Open-ended funds allow investors to buy and sell shares, as presented in the MFL;
- Licensed mutual funds are fully regulated by CIMA and are marketed locally or internationally;
- Administered mutual funds are similar to licensed funds;
- Registered mutual funds are the most prevalent type of mutual funds in the Cayman Islands, which require a minimum investment or listing on an approved stock exchange;
- Limited investor mutual funds are now regulated and require registration targeting investors without a minimum investment requirement;
- Master funds act as investment vehicles where other funds, referred to as feeder funds, invest their assets.
You can set up a mutual fund in the Cayman Islands choosing from these various categories.
Fund vehicles
The common fund vehicles utilized for opening a mutual fund in the Cayman Islands are:
- Cayman Islands exempted company is a flexible business structure that allows the fund to buy back its shares. It is suitable for both open-ended and closed-ended funds;
- Segregated Portfolio Company (SPC) is an exempted company with compartments (protected cells or portfolios) to separate different groups’ assets within one company;
- You can set up a mutual fund in the Cayman Islands through unit trusts, which are established under a trust deed. Investors’ interests are represented as units in the trust;
- Exempted limited partnership is easily established, similar to an exempted company or unit trust. Partners have limited liability.
We can provide you with more details if you are interested in setting up a company in the Cayman Islands.
Statistics about mutual funds in the Cayman Islands
Individuals interested in learning more about mutual funds in the Cayman Islands can find the following statistics useful:
- From July 1, 2023, to September 30, 2023 (Q3 of 2023), there were 8,833 registered mutual funds in the country;
- In the same period, 3,208 master funds were in the Cayman Islands;
- Only 52 licensed mutual funds were administered in the same timeline;
- The total mutual funds in the Q3 of 2023 was 13,008.
Besides company formation services related to mutual funds or other types of companies, we also assist in matters regarding immigration to the Cayman Islands.
You can contact our team for more assistance regarding opening a mutual fund in the Cayman Islands. We can help you through the entire process and address any questions you may have.