Investment funds are divided into several categories, our company focuses on establishing open-ended investment funds, often referred to as hedge funds. Majority of the world’s hedge funds are situated in the Cayman Islands (up to 85% of all funds). Other funds are situated in such territories as the British Virgin Islands, Bermudas, Jersey, Luxembourg or Malta. The reason for establishing a hedge fund is a low level of regulation in making investments, it is possible to invest into all asset classes (long-/short-term with high leverage); and to keep shares in companies according to different criteria (sectors, maturity, revenue from dividends or territory). Investors are attracted by the possibility of high gains, which, however, involves a high level of risk of loss. Each hedge fund is different and depends on strategy chosen by its administrator. Hedge fund itself does not have legal status, it is always established by the administrator. Establishing a hedge fund is always financially demanding and requires a high amount of initial capital. Each fund can be independent or form a structure of cells, which can be mutually independent. The fund does not have any other assets than the assets from the invested portfolio, and cash. It does not have any employees; the fund’s manager is usually an employee of the company that established the fund. Hedge funds generate revenue by charging an annual fee for investments made into the fund (usually ranging from 1% to 4%) and by charging the profit-sharing (usually from 20% to 30%). Each fund must have an administrator who is responsible for the calculation of the fund’s value and who is in charge of other administrative functions. We have a solution for novice managers, enabling lowering the costs when establishing their own fund – by forming a sub-fund in an already-existing structure of funds where assets and liabilities of the sub-fund are legally separated from other parts of the fund and other sub-funds; and using the already created infrastructure of services, control and management. This solution is very popular among novice managers who do not have sufficient capital backup and clientele yet.
Private Equity Funds
In addition to hedge funds, we also offer establishing a private equity fund that is usually classified as closed investment fund. Private equity funds invest means in assets that are not publicly traded, for example in start-ups, companies with economic problems, etc. The differences between hedge funds and private equity funds are in, for example, the length of investment commitment, liquidity, structure of fees and restrictions when investing.