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Newsletter | Articles Island Launches Campaign to Attract Hedge Fund Managers HEDGE funds have taken the investment world by storm in recent years with high profile managers making fortunes by using advanced investment strategies to create big yields for investors. The majority of these funds are based in big financial centres like London, where the management expertise is available. Some are based in specialist offshore jurisdictions, where there is also a high concentration of finance sector professionals. Coutts bank has capitalised on the success and popularity of hedge funds, by launching a series based in the Cayman Islands, focusing on global equity markets, offering double digit annual returns with acceptable levels of risk. The Isle of Man is mounting a campaign to attract hedge funds and their managers. This will raise the profile of the Island, bring in taxation funds to Government coffers and also attract wealthy fund managers to live here - in line with the personal income tax cap policies of Government. There are three major areas of hedge fund management. The first is where they are incorporated, the second is where they are administered and the third is the location of the investment managers. The Isle of Man already does well in administration, with 14 registered third party administrators, handling hedge fund administration. Funds under management have grown from U$7bn three years ago to U$40bn at present. The weaknesses lie in the other two areas. David McGarry, chairman of the Isle of Man Fund Management Association, said: 'Most hedge fund managers are based in London. This is of interest to us as the Inland Revenue is clamping down on how they are remunerated (something called the Investment Managers Exemption scheme). The Isle of Man is a fantastic location with good links to London. We are making a strong approach to fund managers.' Isle of Man based Charlemagne Capital and Laxey Partners already base their managers in the Island and Mr McGarry said this will help to influence others. The other area is incorporation. Around 86 per cent of the world's hedge funds are currently incorporated in the Cayman Islands, but Mr McGarry believes the Island's new company legislation can change that. He said: 'The Cayman Island legal offering is very simple and straight forward. We have the NMV (New Manx Vehicle), which is well suited to hedge fund incorporation, but we need to roll it out and publicise it more widely.' He added that the benefits of incorporating hedge funds here will come from lots more work for the professional services firms (ie lawyers), plus money for the Government in the form of incorporation fees. He added that it was likely that more hedge funds would bring their administration here if incorporated in the island, consequently creating jobs, income tax and VAT. |