We recommend Investment Law Group for investment fund development services, including formation, legal, regulatory and registration issues.
What you trade determines what type of hedge fund you need. Do you trade securities, commodities, futures or forex? It makes a world of difference in fund design. Securities traders need a securities fund, commodities and futures traders need a commodities pool and forex traders need a currency fund. Each fund is very different. The SEC and states regulate securities funds, and the CFTC and NFA regulate commodity and forex pools.
It’s a small world; you may need a U.S., an international (offshore) and a master-feeder fund. The majority of hedge funds and advisers may currently reside in the U.S., but a significant part of investor money comes from international investors residing outside the U.S.
U.S. investors who are taxable in the U.S. prefer U.S.-based funds. International investors and tax-exempt U.S. investors prefer international funds. Advisers prefer master-feeder funds so they can integrate both U.S.-based and international funds for ease of operations. Mini-master funds are another type of structure that can deliver certain tax efficiency for the managers.
Our incubator fund strategy is a great way to get started!
When it comes to forming a fund, it’s important to speak to a law firm with expertise in investment management. We recommend Brent Gillett JD of Investment Law Group.
We look forward to working with you soon.
Robert A. Green, CPA & Darren L. Neuschwander, CPA
Managing Members of Green, Neuschwander & Manning, LLC (GNMTraderTax)