Getting The Structure Right
Sun Dec 1, 2002
Meeting the tax needs of investors will determine where a fund is located and how it is structured, explain Daniel Shapiro and Christopher Hilditch, partners at Schulte Roth & Zabel International
Structuring a fund of hedge funds involves balancing many
different and complex issues and the methods of structuring
funds of funds are evolving rapidly. The chosen structure
depends entirely on the type of investors you wish to attract
as each group of investors faces different tax and regulatory
Non-US investors. Non-US investors will typically
invest in an offshore fund of funds. These can be established
to operate with single or multiple currencies using separate
classes of shares.
Alternatively a feeder structure can be used. Similarly,
separate feeders can be organised to deal with other specific
requirements, such as German investors which may require to
invest through a derivative instrument such as a structured
Various other specific needs for non-US investors from
different countries can also be accommodated. For instance,
Japanese investors typically invest through a separate trust
organised in the Cayman Islands. Therefore a special class of
ISSN: 2151-1845 / CDC10004H
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