When it comes to offshore jurisdictions and mutual funds, the Cayman Islands is one of the best. The reason this is true is the Cayman Islands have a wonderful regulatory structure, no taxation, and a highly competent private financial services sector. At this time, around 1,500 mutual funds have been registered and over 100 mutual fund administrators are available.

Mutual funds in the Cayman Islands can be established in the form of limited partnerships, unit trusts, and ordinary companies. They also offer many different stock structures and classes from open-ended and close-ended funds to multi-currency and hybrid funds. Regulations include such items as “multi-funds” that are a type of sub-funds that in one single fund. The Cayman Islands funds are traded on several different exchanges, which are mainly the London Exchange and the Cayman Stock Exchange.

The Cayman Mutual Funds, which are regulated by the Mutual Funds laws, does not restrict like the US securities laws for fund structure and operation, instead the focal point is on the administrators and managers of the fund and others that sell or promote the funds. You do not have to offer the documents for funds in a certain language as long as the analyzer is able to understand if the fund will make a suitable investment.

Every mutual fund in the Cayman Islands has to file an annual audited statement with the Monetary Authority. The auditors are also regulated by the Cayman government and have to report to the Monetary Authority if they find any item suspicious or reason for concern.

Open-ended funds can only qualify through three avenues under the Cayman Islands laws that accept investors; these are highly regulated as well.
The fund can
*File an application with the monetary authority
*Can appoint a Mutual Fund Administrator to supply the principal office of the fund in the Cayman Islands
*If they do qualify, they can register with the Monetary Authority as a Mutual fund.

The qualifying steps are very hard and there is a minimum initial investment of US$48,000 or the fund must already trade on a recognized stock exchange. The annual fee is now US$600 with other fees such as formation and licensing fees.