The Isle of Man has a full suite of fund options, but the fund category of choice for institutional alternative investment is the new Specialist Fund, or “SF”.
Closed-Ended Funds (or Investment Trusts)
Strictly speaking, these are not classified as mutual funds under the Island's Financial Services legislation. However, they are another vehicle for collective investment, and can be particularly appropriate for venture capital, unlisted securities or property investment, all of which are illiquid and require longer term investment commitment. Normal (open-ended) funds are often unsuited for this kind of investment as investors usually have the right to withdraw their capital at short notice and at frequent intervals.
This fact sheet sets out the Island’s cost-effective and practical location for the establishment of alternative funds, with a particular emphasis on the new Specialist Investment Fund category. Details within this document are for guidance only – the original legislation should be consulted for legal purposes.
The new Qualifying Fund or “QF” is the ideal solution for distribution to non-retail investors, offering maximum flexibility on strategy and asset allocation.
Exempt International Schemes are unregulated private funds which cannot be marketed to the public and are restricted to having no more than 49 participants; these funds are generally suitable for use by small groups of investors where wide promotion and extensive regulation are unnecessary.
Mutual Funds
In the Isle of Man, mutual funds can take the form of companies (open or closed-ended), unit trusts, limited partnerships (more than 20 limited partners are allowed) or pure contractual arrangements, whilst investors can participate through the holding of shares, debt securities, units or basic contractual rights. Which structure is most appropriate will depend upon factors such as the type of investments being made, the jurisdiction(s) where they will be made and the taxation treatment of the investors at which the structure is targeted. In addition, funds administered in the Island have the choice of incorporation in the Island or other domiciles.
Authorised Schemes
Authorised Schemes are funds that are subject to detailed and prescriptive regulation and which are capable of promotion to the general public in the Isle of Man, the United Kingdom and elsewhere. These funds are suitable for promoters requiring a retail investment product benefiting from a high degree of investor protection. Investors in authorised schemes are covered by a compensation scheme.
International Schemes
International Schemes are funds that are subject to limited regulation and which are capable of promotion outside the Isle of Man, subject to host jurisdiction rules. International Schemes can be used as both retail and institutional funds and are very flexible since few regulatory investment restrictions are applicable.
Professional Investor Funds
Professional Investor Funds are a special category of fund designed for the exclusive use of institutional and High Net Worth professional investors. As unregulated funds, they can be established quickly and inexpensively, and are not subject to any regulation or restriction on number of investors. However, these funds must have a minimum subscription level of US$100,000, and can only be sold to defined "professional investors". The Professional Investor Fund (along with the Experienced Investor Fund) is a particularly suitable vehicle for alternative investment products, for example hedge funds.
Alternative Fund Domicile Factsheet (354 kb)Format:Acrobat PDF File
A cost-effective and practical location for the establishment of alternative funds
Because, in the Isle of Man, you can have the best of both worlds (2684 kb)Format:Acrobat PDF File
Our low personal and business tax strategy, world beating technology environment and an unparalleled quality of life makes the Isle of Man an ideal environment for fund management.
Closed-Ended Investment Companies (357 kb)Format:Acrobat PDF File
Total flexibility in a cost-effective Eurpean location
Exempt Schemes (349 kb)Format:Acrobat PDF File
Flexibility for family office and private funds
Qualifying Fund (345 kb)Format:Acrobat PDF File
Offering flexible solutions across all asset categories
Specialist Fund (321 kb)Format:Acrobat PDF File
The fund structure for Alternative Investment
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