Investment Funds in Uruguay
Fund industry in Uruguay
In the last decades, the mutual fund industry kept growing world widely. The stock markets regained their confidence after the 2010 crisis and the number of active investment funds and assets increased exponentially. Unfortunately, this international trend avoids the financial market in Uruguay. Although the administration in Montevideo issued the Funds Act (Law No. 16. 774) in 1996, there are very few operating funds in the country. According to this Act, a Uruguayan fund does not have a legal personality and whoever manages a fund also administrates its assets. The Central Bank of Uruguay controls and supervises the investment funds in the country.
Types of investment funds in Uruguay
Financial trusts and offshore funds are the main investments carried out in Uruguay. As a collective investment mechanism, offshore funds are very appealing to the foreign investors. The main advantages of this type of investment fund are:
• Tax benefits – lower taxes than those imposed in national jurisdictions;
• Concentrated fund expertise – experienced administrators, accounting and auditing firms, legal companies and affiliates who can provide specific knowledge;
• Predictability in terms of economic legislation and financial security;
• Flexible investment strategies and limited restrictions imposed by the onshore authorities.
Financial trusts are very popular investments in Uruguay, an alternative to the bank credit. The national authorities introduced financial trusts in 2004, when the country was in need of credit in different economic areas: agro-industry, green energy production, real estate. The financial trust is a very safe investment due to a certificate of participation that is issued to all investors and secured by the trust assets. Please contact our affiliates in Uruguay for detailed information about the legal framework specific to financial structures and instruments.
In case you want to find out details on how to start an investment fund in another country, for example in the Netherlands, please check out our article on hedge fund startup procedure in the Netherlands.