Start a hedge fund: A guide for 2022

Are you thinking to start a hedge fund? Perhaps you are a starter investment manager who wants to build their portfolio, or you are looking at investment options for a group of family or friends? Hedge funds are not just for big-name companies and high-rollers, there are plenty of more accessible options available. In this guide, we will look at options for starting a hedge fund in 2022 with the help of Fast Offshore.

Decide on the jurisdiction

There are several jurisdictions where you can start a hedge fund, but not all are the same. Many are tailored towards more experienced fund managers who have already developed a portfolio. There are options for those who are beginners or just starting and want to create that track record. The most popular of which is the British Virgin Islands which offers Incubated Fund and Approved Fund.

Both funds enjoy a lighter-regulatory touch, as well as minimal requirements, costs, and times. There are some limits in place, but it is easy to scale up your hedge fund if needed. As a jurisdiction, BVI is stable, secure, business-friendly, and used to dealing with this type of investment vehicle. In other words, you and your investors are in good hands.

Pick a vehicle

The Incubator fund is mainly geared towards emerging managers and startups. It is quick to launch, low cost, and has minimal regulatory obligations. Additionally, there are few needs for mandatory functions such as auditors or investment managers. It has some limitations regarding the number of investors and the total investment. It also expires after two years, with the option to extend for another. After the three years are up, it must be closed or upgraded to another BVI fund.

Approved Funds are a common step up from the Incubator Fund. They allow a more excellent value of investments and are open-ended time-wise. Should you exceed the value limit, you will be required to either reduce it or change it into another kind of fund. Like the Incubator Fund, the Approved Fund is easy to set up and relatively low cost to manage. It does have some more obligations, such as a fund administrator but still does not require a custodian or manager.

Get a partner

Once you have an idea of where you want to start a hedge fund and what kind of fund it will be, you need a partner. Alternatively, you might not yet know where or which type of fund you want, and instead, you want to consult an expert for advice. At this stage, a professional corporate services company like Fast Offshore can step in to assist. Having worked with investments and funds for over 24 years, we have worked with countless fund managers. We are also experienced in all matters related to the establishing of and maintaining funds in BVI. While the process is straightforward, it is recommended you work with an expert to ensure the smooth launch and operation of your fund.

Prepare the documents

Now you are ready for the next stage of setting up a hedge fund! It is time to collect all your documents together. Which documents you need will depend on the type of fund you are establishing. Typically, you will need an application form, constitutional documents, due diligence on each party involved, a CV and police conduct certificate, and a written warning to investors, amongst others.

Submit the application

Then it is time to submit your application. When you start a hedge fund and partner with Fast Offshore, we will take care of this for you. As long as all forms are in order, you can be up and running in a few weeks. This makes BVI a great jurisdiction for hedge fund setup.

Stick to the requirements

Once you have set up a hedge fund, you need to be aware of ongoing obligations. For example, you may need to file financial statements and annual, or semi-annual returns. If there are any changes to the fund’s offering or its directors, you should also be sure to update the regulator. 

In addition, there is an annual license fee and the appointment of an authorized representative to consider. You also must ensure you do not exceed the limits of your fund, and if you do, that you remedy it appropriately as soon as possible.

Start a Hedge Fund

As you can see, the process to start a hedge fund is not complicated or expensive, nor is it particularly time-consuming. To find out more, or start the process, contact Fast Offshore today!

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