How to start a hedge fund
A hedge fund is a type of investment vehicle that uses different strategies to earn active run for their investors. An advantage of a hedge fund is given by the fact that it can employ a wide category of investment strategies on local and international markets.
The registration procedure available for a hedge fund generally differs based on the jurisdiction in which the vehicle will be set up. In order to set up an investment fund as a hedge fund, the investors will have to respect the legal requirements that are established under the investment legislation available in a country, provide the necessary minimum capital, appoint a management company that will manage the assets of the fund and provide the necessary documentation for the registration of the fund, these being some of the most common aspects involved in this case.
At the same time, it is highly recommended to receive legal assistance during the registration of the fund from specialized lawyers, financial advisors or any other type of entities who have the necessary expertise in this field.
Then, the investors should decide upon the legal entity of the fund and the most common ways to start a hedge fund, regardless of the country in which it is set up, are by incorporating a limited partnership or a limited liability company. The hedge fund usually needs to obtain a type of approval/license from the main regulator of the country in which the vehicle will operate.
As mentioned earlier, a hedge fund can easily invest in a wide category of assets, which is also the case of Ireland, where such funds are not restricted in any way concerning their investment strategies. This jurisdiction is one of the most developed markets for the domiciliation of local and international hedge funds, which have to be authorized for their investments by the country’s main regulator, the Central Bank of Ireland.
One of the simplest ways to register a hedge fund in Ireland is by opting for qualifying investor funds. This option can allow the investor to obtain the authorization from the local institution within a day, but it is necessary to know that the minimum capital investment per each investor is established at EUR 100,000.
Since the fund can invest in any types of assets, Irish hedge funds can easily invest in new financial sub-sectors, such as the cryptocurrency field; at the moment, Ireland is seen as one of the leading destinations for cryptocurrency hedge funds, due to a set of reasons (the country is perceived as a European technology hub and provides very advantageous tax regulations).
This article does not necessarily reflect the opinions of the editors or management of EconoTimes