JURISDICTIONAL ALPHA
Fund domiciles as a source of differentiation
LP due diligence on jurisdiction increases amid tighter fundraising.
Luxembourg wins as a fund domicile of choice.
Regulatory simplicity remains elusive but increasingly essential.
Faced with uncertainty, managers are craving stability. When choosing a fund domicile, this means favouring a consistent and advantageous regulatory environment. With dispersions of returns across regions continuing to widen and rules continuing to evolve, prudent jurisdictional choice can be a valuable source of alpha.
GP sentiment paints a mixed picture. Private Equity Wire®’s Q2 2026 survey covered respondents from the UK and Europe (51%), North America (32%), APAC (9%) and other regions (8%). The fundraising outlook over the next 12 months was described as challenging by 54% (Figure 1). Still, there is also some optimism that we may be turning a corner, with a positive outlook being reported by 24%. In North America 42% said it is positive, compared to just 18% in UK & Europe, where another 32% would describe as neutral. In each area 50% described it as challenging.
Meanwhile LPs that are committing capital in this environment are more scrupulous and prescriptive than ever, on everything from fund structures to domiciles.
DOMICILES OF CHOICE
Overall, 86% of respondents reported that LP due diligence on jurisdictional choice and operational
infrastructure has increased in recent years, with a larger share saying it has done so moderately (55%) compared to significantly (31%). The rest (14%) reported no change, with none saying that it has decreased.
“The global funds industry has evolved significantly in recent decades, with new jurisdictions gaining traction in the market alongside those that already have a leading reputation. This is particularly true in the alternative assets space,” says Simon Page, Head of Fund Services at Hawksford.
“For LPs, the domicile is a key risk lens. It determines the strength of oversight, investor protections, reporting expectations and how confidently capital can be deployed, monitored and returned. In today’s environment, LPs are gravitating to jurisdictions with predictable regulation, credible supervision and proportional AML/KYC regimes that reduce execution risk and reputational exposure. A well understood legal framework also helps GPs run cleaner processes, avoid structural complexity and minimise avoidable friction. Ultimately, jurisdictional choice is about safeguarding outcomes, not just meeting requirements.”
Luxembourg was overwhelmingly where the most respondents are considering a new launch within the next 12 months, cited by 56% (Figure 2). This was followed by the Cayman Islands and Delaware, both coming in at 21%.
Recent volatility means there has been little appetite for fund launches in the Middle East. Just 7% of respondents say they would consider a launch in Abu Dhabi Global Market, with even fewer (2%) choosing the Dubai International Finance Centre. Elsewhere, investors are favouring jurisdictions with consistent regulatory regimes, such as Ireland (14%), Jersey (16%) and the UK (12%).
“Stability shows up in the day‑to‑day mechanics of running a fund. Jurisdictions with mature regimes and experienced regulators typically deliver more predictable approval
Figure 1 Fundraising outlook for next 12 months
timelines, clearer interpretations and fewer last‑minute changes to structuring or substance requirements. This matters when GPs are under pressure to launch efficiently and LPs are scrutinising every operational detail. A stable fund domicile helps contain costs, reduces friction in administration and reporting, and supports consistent compliance as regulations evolve,” says Page.
“While offshore jurisdictions like Cayman offer the highest flexibility for capital raising, onshore European jurisdictions such as Luxembourg and Ireland provide the necessary regulatory passporting for pan European marketing, while Jersey offers a compelling alternative route into Europe through National Private Placement Regimes (NPPRs).”
FRICTION POINTS
Agility in regulations is just as important as stability.
Approval timelines when launching were selected by 57% of respondents as the biggest friction (Figure 3), followed by local substance and director requirements (45%). Firms value a clear and consistent legal framework: complexity in legal structuring is cited by 31% as a key challenge.
As the investor base for private markets increasingly comprises wealth investors, such as family offices and HNWIs, KYC/AML has become another friction point, cited as a challenge by 38% of respondents. This is becoming an increasing focus for firms as they attract more capital from
retail and wealth investors. While their traditional source of income, from institutional investors, is unlikely to be of concern, additional risk is introduced when serving these new wealth channels.
“Choosing the right jurisdiction in which to establish your fund will depend on factors such as the market you want to enter, where you want to attract investors from, and the flexibility you require, along with many other important considerations,” says Page.
“Hawksford has a presence in key fund locations around the world – ones that have demonstrated stability and certainty, and continue to attract fund managers and investors who value flexibility and ease of doing business. This global footprint enables us to deliver on the ground support to clients from set up through the entire fund lifecycle.
“Whether you’re setting up your first fund or scaling an international platform, our expertise in the funds sector, along with our network of trusted advisers, lawyers and other professional partners, means you can be up and running at speed, and in a fully compliant manner.
“Stability and agility in the regulatory environment are now currency for funds, and routes to alpha generation. Not only for the security which wins LP commitments, but also to minimise the frictions and cost pressures which feel particularly acute in the current landscape.”
Figure 2 Jurisdictions likely to be targeted in next 12 months
Figure 3 Main friction points when launching in a new jurisdiction