What Is the Structure of a Hedge Fund?
Updated on Wednesday 14th December 2022
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What are the main financial tools used by a hedge fund?
A hedge fund startup is generally represented by the same characteristics available for a mutual fund. The hedge fund can invest in a wide category of financial tools, such as investments in equities, bonds and securities. The fund is typically managed by a fund manager and the investors of the vehicle, who will have the quality of limited partners.
What is the organizational structure of a hedge fund?
One of the main concerns of those interested in how to open an investment fund is the legal entity under which the fund will operate. In the case of a hedge fund startup, most of the investors register the vehicle as a limited or general partnership and this is applicable regardless of the jurisdiction in which the fund will operate. The structure of the fund will be comprised of a fund manager, who will act as a general partner, and the fund’s investors, who will be, as mentioned earlier, limited partners.
One of the ways through which you can start a hedge fund is the Cayman SPC. The Segregated Portfolio Company is a single legal organization where different segregated portfolios may be established. Each segregated portfolio's assets and liabilities are legally distinct from those of the other segregated portfolios, which makes it very advantageous in terms of liability.
The following video offers a short presentation on the structure of a hedge fund:
One of the ways through which you can start a hedge fund is the Cayman SPC. The Segregated Portfolio Company is a single legal organization where different segregated portfolios may be established. Each segregated portfolio's assets and liabilities are legally distinct from those of the other segregated portfolios, which makes it very advantageous in terms of liability.
The following video offers a short presentation on the structure of a hedge fund:
Who are the key players of a hedge fund?
Another important aspect which is relevant for the investors who are interested in the procedure on how to start a hedge fund refers to the entities that will be part of the investment activities carried out within the vehicle. In this case, the fund should be represented by the following:
- the investment manager – the person who determines the main strategy that should be carried by the fund and who makes the investment decisions;
- the broker - which is usually represented by a securities company that determines the amount of money used as loans the fund can receive;
- the auditors – the professionals who are entitled to verify the fund’s financial statements;
- the investors – the natural persons or the legal entities that have invested a specific amount of capital;
- legal advisors – consultancy companies and law firms that can offer advice on the legislation regulating the hedge fund.
Businessmen who want to receive further information on the structure of a hedge fund startup can address to our team of affiliates, who may provide specific information on the rules of law available in specific top investment destinations, such as Luxembourg or Switzerland.