Most reputable offshore fund administrators are based, or maintain a major presence in Grand Cayman (as well as BVI and Channell Isl., and a few other choice locales.) The same holds true for Accounting, Compliance and Legal firms that specialize in servicing off shore hedge funds operated by US fund managers. As I'm sure your investors have explained, most offshore institutional investors will not invest directly in the US markets without using a conduit such as an offshore fund. The tax liability is not the issue. The US tax authorities require all investors, foreign or domestic to disclose tax identification information (SS#, TIN). The investor's domicile national authorities can then have the IRS produce all information on file based on memorandums of understanding we maintain with most industrialized nations. This is the sole reason that offshore hedge funds are so popular, and that most successful US hedge funds operate a twin offshore fund to service that market. In answer to your question, it does indeed come down to legal and accounting. At $1 million, I don't think it would be cost effective for you to retain an administrator.
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Hedge Fund Startup & Ongoing Costs
- Thread starter JTrader7
- Start date
Mokwit,
Not trying to be adversarial here, but in point of fact I believe the negative connotation you refer to applies to the banking industry and it's spotty history, including some incidents related to the laundering of colombian drug money. The largest fund administrator in the world (citgo) is based in grand cayman, and services most of the offshore interests of hedge funds that are capitalized over $1 billion. There is practically no reticence in the offshore institutional investment community to invest in an offshore hedge fund based in the Cayman Islands based on this kind of stigma.
Not trying to be adversarial here, but in point of fact I believe the negative connotation you refer to applies to the banking industry and it's spotty history, including some incidents related to the laundering of colombian drug money. The largest fund administrator in the world (citgo) is based in grand cayman, and services most of the offshore interests of hedge funds that are capitalized over $1 billion. There is practically no reticence in the offshore institutional investment community to invest in an offshore hedge fund based in the Cayman Islands based on this kind of stigma.
One thing to bear in mind is whether the Cayman Islands are regarded as clean for onward fund transfer purposes. I have a vague memory that we would not accept funds from the Caymans
This was the point I was making, you may well be correct with regard to fund administrators. Considering someone is seeking this kind of advice on ET I thought I should point this out.
This was the point I was making, you may well be correct with regard to fund administrators. Considering someone is seeking this kind of advice on ET I thought I should point this out.
Cayman is fine most offshore funds are based there. 99% of the hedge funds i deal with are based there . IT will NOT put people off being based in the Cayman .
If you looking for intuitional money you will need an admin + accountant . No one will touch you with out a good admin .
I'd say min of 3-5 mill $ to make it worth while . I think the admin people are referring to are http://www.citco.com/ , they are very good we were going to use them .
for 8k for set up is very cheap , we were quoted £15, 000 .
You also need to draw up legal docs etc which wont be cheap !
I know people are just trying to help , but if you dont know what your talking about donât post its a waste of time .
If you looking for intuitional money you will need an admin + accountant . No one will touch you with out a good admin .
I'd say min of 3-5 mill $ to make it worth while . I think the admin people are referring to are http://www.citco.com/ , they are very good we were going to use them .
for 8k for set up is very cheap , we were quoted £15, 000 .
You also need to draw up legal docs etc which wont be cheap !
I know people are just trying to help , but if you dont know what your talking about donât post its a waste of time .
If you are looking for institutional money you will have to hire brand name fund services, audit and tax, and legal. If you want to run money in Cayman at all you have to hire local (cayman) bookkeepers, legal, etc. Since nobody wants a bunch of locals touching their money, all of the big firms opened offices there. You will pay a min 50K a year for a decent bookkeeper there another 50K for audit and tax and these numbers are optomistic. Your ongoing legal fees will be high as well. Running offshore money is not a one man operation. To do it right will take a supportive staff and a few hundrek K of ongoing expenses. The only people who start with less than 100M are the ones with the background that lets them believe they will raise their first 100M relatively quickly.