Future of Offshore Hedge Funds

Future of Offshore Hedge Funds

Future of Offshore Hedge Funds After the Financial Crisis

With a wave of new regulations aimed at the hedge fund industry, it's hard to predict what the state of the industry will be in a couple years.  I found an interesting article discussing specifically the future of offshore hedge funds.  It is likely that the regulation will include not only European or American funds but also cover managers or investors operating offshore, so offshore hedge funds are worrying over the new legislation as much as any other firm.
“In the future, offshore funds and funds in general will differ from the kind of funds we’ve seen in the market up to this point,” says Simon Schilder, a partner with law firm Ogier in the British Virgin Islands. “How they differ will very much depend on how things end up playing out [in the regulatory environment]. What is for certain, though, is the continuing role of offshore funds and their importance in both the fund industry and the broader financial community.”

Says Schilder: “In this brave new world, transparency is the key, particularly tax transparency. The OECD has made entering into tax information exchange agreements the criterion according to which jurisdictions are white-listed, grey-listed or black-listed. The BVI is a white-listed jurisdiction with 15 Tieas currently in place. We recognise that the criteria for being white-listed will change, and the BVI continues to discuss further Tieas with OECD member states.”

“The lessons learned will influence how funds are structured in the future,” Schilder says. “One example is the use of gates, which enable managers to control how much money is coming out on any given redemption day and which can be structured on a class-by-class basis or for the fund as a whole.”  Read whole article here.

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