The Cayman Islands Monetary Authority (CIMA) announced this week that the islands' hedge fund sector is continuing to boom, with an additional 665 funds having registered in the first five months of the year.
The years 2004 saw a record 1,405 funds acquiring registration, and 2005 was almost as good. Now it seems that 2006 will also see a comparable level of activity.
At the end of 2005 there were 7,106 registered hedge funds on the islands, putting it far ahead of competitive jurisdictions such as the BVI and Bermuda.
The SEC's new rules for hedge fund registration in the US have done nothing to lessen the attractions of 'offshore' as an alternative domicile. Many US fund managers now choose to register their funds in Cayman, with actual management sub-contracted to US or UK firms.
Overall, the level of assets invested in hedge funds around the world rose in 2005, largely as the result of pension fund assets that were invested into the alternative investment vehicles, with a special emphasis on Japan. More than US$2.5 billion in pension funds were invested in alternative vehicles in Japan in the first nine months of 2005, primarily through hedge funds domiciled in the Cayman Islands. Total assets of the hedge fund sector are now thought to be in excess of US$1.3 trillion.
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