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| INVESTORS OFFSHORE -
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Cayman Islands A Conduit For Asian Hedge Fund Investors,
by Phillip Morton, Investors Offshore.com 25 February 2005
A surge in interest from Asian investors has contributed to a 100% increase in
the number of hedge funds registered in the Cayman Islands during 2004, as more
than 1,100 new funds were established in the jurisdiction last year, according
to a new analysis released by global offshore law firm Walkers.
It means that over 80% of the world's hedge funds, which number more than 8,000,
are now registered with the Cayman Islands Monetary Authority (CIMA), the Cayman-based
law firm, which has also has offices in the British Virgin Islands, Hong Kong
and London.
However, interestingly, the report has observed a substantial increase in investments
by Asian institutional investors in US debt and equity markets carried out
through Cayman-based investment funds. This has been particularly true of Japan,
from where investments destined for the Caymans have grown 150% compared to
the previous year.
This has helped investment inflows to the United States grow at an estimated
rate of 50% per year.
It is believed by Walkers that the Cayman Islands have become a popular hedge
fund domicile due to its lack of taxation, its sophisticated financial infrastructure
that includes major banks and accounting firms, and the ability of funds to
achieve measurable cost savings which can be passed along to investors.
"Today, hedge funds are global, and are an essential element in a myriad
of investment strategies," stated Mark Lewis, a partner at Walkers and
joint head of the firm's investment funds team.
"Hedge funds are essential to the liquidity of the global capital markets,
a need that is only going to increase with the march to the greater globalization
of the marketplace. It is clear that savvy market professionals and institutional
investors recognize the enormous advantages the Cayman Islands offer when it
comes to domiciling hedge funds and other investment vehicles,” he noted.
According to Walkers, Asian hedge funds have grown from 162 funds managing
$13.8 billion in 1999 to more than 500 funds managing in excess of $59 billion
at the end of 2004.
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