Offshore Centre Sets New Hedge Funds Record

Stephen Harris

18 August 2005

Despite an overall slowdown in the inflow of capital to hedge funds, a record number of new hedge funds were created in the Cayman Islands during the first six months of 2005, according to Walkers, the offshore law firm. The Cayman Islands continue to dominate the global hedge fund industry as the domicile of choice, with a 13 per cent increase during the first six months of 2005. The total number of registered funds grew from 5,932 to 6,527 in the period and now more than 80 per cent of the world's hedge funds are registered with the Cayman Islands Monetary Authority. In contrast, the second quarter of 2005 saw the smallest net quarterly inflow of assets into hedge funds generally since the fourth quarter of 2001, according to Tremont Capital Management. "As money managers and investors, particularly those in emerging markets such as Asia, continue to have assets to invest and a need for strong returns, it's certain that the growth in Cayman's hedge fund industry will continue. With more than 795 new hedge funds established in Cayman through the end of June, Cayman's position as the leading offshore investment funds jurisdiction is well established," said Mark Lewis, a partner at Walkers and joint head of the firm's investment funds team. Walkers now handles more than 40 per cent of all new Cayman hedge funds.