Why Start an Investment Fund?

Updated on Thursday 13th April 2017

Why Start an Investment Fund? Image
Regardless of the jurisdiction in which the investors choose to start an investment fund, they can have numerous benefits. The most important countries which are chosen for the domiciliation of an investment fund provide a wide range of tax exemptions, a simple registration procedure and, most importantly, an advantageous market and a large variety of investment vehicles that would guarantee a successful return on investment

1.    Reducing the risk associated with investments 

Investors who are interested in how to start an investment fund should know that one of their main decisions will be related to the type of vehicle chosen for incorporation. One of the main advantages for starting an investment fund refers to the fact that the vehicle provides risk reducing methods, which can be achieved by investing in a wide category of assets – such as bonds, shares, securities or property. 

2.    Carrying multiple investment strategies

Also, the risk could be minimized by establishing multiple investment strategies, and this could be achieved by opening an umbrella fund, which is a type of fund that allows the registration of sub-funds which may carry different investments at the same time. 

3.    Tax advantages 

Depending on the jurisdiction in which the investment fund is registered, the local authorities will impose an attractive taxation system, which will not include most of the corporate taxes. At the same time, the investors will generally be exempted from paying the net wealth tax.

4.    Variety of investment fields 

Countries which represent an attractive market for fund domicilation usually provide numerous investment fields that can offer advantageous business opportunities. Investment funds, also including hedge funds startups, can be traded on the the local stock markets in which they were incorporated, as well as on international markets. 

5.    Sources of financing  

The procedure of starting a hedge fund or other type of investment vehicle will also include a large initial capital. Hedge funds are allowed to receive financial assistance from a wide range of third parties, such as:

•    high-net worth persons;
•    foundations;
•    corporations;
•    wealth management companies;
•    financial advisors

On a related topic, investors can also find out more details on the requirements for starting a hedge fund in Netherlands

At the same time, the investors may require funding from close friends or family members, a topic that our editorial team will cover in the near future. All investors interested in starting an investment fund anywhere in the world will need the assistance of an financial expert.