The Cayman Islands are the world’s leading offshore centre for the establishment of hedge funds and private equity funds.
There are over 13,000 mutual funds licensed, registered or administered with the Cayman Islands Monetary Authority (CIMA). Following the enactment of the Private Funds Act in 2020, there are over 17,600 private funds registered with CIMA. Most investment funds are aimed at institutional or sophisticated/high-net-worth investors, which is reflected in the types of funds that are regulated in the jurisdiction and their assets under management.
The Cayman Islands continues to be the market leader for offshore alternative investment funds. As at Q2 2026, the Cayman Islands Monetary Authority (CIMA) recorded 13,013 regulated mutual funds and 18,132 private funds. That scale is not an accident. It reflects an established legal framework, a deep professional services market and a product that institutional allocators and managers around the world already know how to use.
The regime covers both open-ended ‘mutual funds’, where investors can redeem at their option, and closed-ended ‘private funds’. Either way, the Cayman fund product is built for institutional, sophisticated and high-net-worth investors, and the rules reflect that. Managers get real structural and investment flexibility. In return, regulated funds carry governance, audit, anti-money laundering, disclosure, valuation and reporting obligations appropriate to their category.
Fund vehicles can be formed as exempted companies, limited liability companies, exempted limited partnerships or unit trusts. Every Cayman vehicle has to be hosted by a licensed registered office provider. From there, the service provider line-up depends on the structure and the strategy. It will usually include Cayman legal counsel, an approved Cayman auditor, an administrator, anti-money laundering officers and the relevant directors, general partner, LLC manager or trustee. Funds are also free to appoint administrators, auditors, custodians and other specialists based in the major financial centres.
Plenty of investment managers still run their business from New York, London and other onshore centres, and Cayman works perfectly well for them. It also works for managers who want a local operation. CIMA recorded 1,337 registered persons under the Securities Investment Business Act at Q1 2026. Where a Cayman entity carries on discretionary fund management, the economic substance regime may also require the core income-generating activities, direction and management and adequate resources to be kept in Cayman. Investment funds themselves sit outside that regime.
More broadly, there is growing interest from managers and related businesses who want a genuine physical presence here rather than just a registered address. Initiatives such as Cayman Enterprise City offer an established route for eligible businesses to take office space, hire people and get properly set up on island. For an entity inside the economic substance regime that can form part of the answer, although the test always comes back to the specific entity and the specific activity.
One notable recent development is Cayman’s statutory framework for tokenised funds, in force since 24 March 2026. A tokenised fund is simply a fund in which investors’ interests are represented digitally, usually using blockchain or similar technology. The token does not change the underlying ownership rights, and tokenising does not change how the fund is classified. It is also a different thing from a digital asset fund, which is defined by what it invests in rather than by how its investor interests are recorded.
Tokenised funds sit within the familiar Mutual Funds Act or Private Funds Act, with some added safeguards. They have to keep secure records of issuance, creation, sale, transfer and ownership, and make those records available to CIMA. The operator confirms the records annually. Transfers need operator approval in line with the offering document. Token-specific risks, including cybersecurity and transferability, have to be disclosed together with how they are mitigated, and CIMA can inspect both the underlying technology and the token transactions. Usefully, a regulated fund issuing its own fund-interest token is carved out of ‘virtual asset issuance’ regulation under the Virtual Asset (Service Providers) Act.
Cayman’s continuing success is not accidental. The courts apply an English common-law system, with final appeal to the Judicial Committee of the UK Privy Council. The platform is tax neutral, so it does not add another layer of Cayman taxation, while investors and managers remain responsible for their own obligations at home. And the professional community here has real experience of complex cross-border structures.
Cayman funds can pursue a broad range of strategies without the law prescribing a narrow mandate, and that flexibility sits on top of mature regulatory and service provider infrastructure. Legal certainty, practical regulation, global recognition and professional depth. That is why Cayman remains the default for serious asset managers building their offshore component.
As at Q2 2026, CIMA recorded 9,000 registered mutual funds, 3,174 master funds, 246 administered mutual funds, 39 licensed mutual funds and 554 limited investor funds, giving 13,013 regulated mutual funds in total. Private funds stood at 18,132.
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The Cayman Islands is the leading offshore domicile for hedge funds, and as regulators and investors have placed more stringent requirements on good governance and oversight, so independent directors have taken up the mantel of supporting the asset management industry. The majority of all new hedge funds have at least a majority of independent directors on their boards.
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As at Q2 2026, CIMA recorded 9,000 registered mutual funds, 3,174 master funds, 246 administered mutual funds, 39 licensed mutual funds and 554 limited investor funds, giving 13,013 regulated mutual funds in total. Private funds stood at 18,132.
In addition there are 67 Administrators currently licenced in the Cayman Islands. CIMA lists all registered fund administrators in the Cayman Islands including Carne, Conyers, Estera, International Management Services (IMS), Loeb Smith, Maples, MUFG, Ogier and Walkers.
