Maples Group - Cayman Islands Trends & Insights: Open-Ended Fund - June 2025
June 2025 Report
The Cayman Islands remains the preferred jurisdiction for establishing offshore funds. We have the expertise, experience, and up-to-date knowledge of market trends necessary to assist our clients in launching their funds during these dynamic and challenging times.
We hope you found the findings and insights in this report valuable. For further information, please contact any of the individuals listed below, or get in touch with your usual Maples Group contact.
Christie Walton Partner | Cayman Islands
+1 345 814 5349
christie.walton@maples.com
Ann Ng Partner | Hong Kong
+852 3690 7475 ann.ng@maples.com
Harjit Kaur Partner | London +44 20 7466 1655
harjit.kaur@maples.com
2024 in Review
The Cayman Islands continued to reinforce its position as a leading jurisdiction for open-ended fund formation in 2024. As at 31 December 2024, there were 12,858 funds registered with the Cayman Islands Monetary Authority (CIMA) under the Mutual Funds Act (MFA). The Maples Group acts for approximately one third of these open-ended funds, providing a unique vantage point on market trends and fund structuring preferences. In this review, we share our observations based on the terms of the open-ended funds launched by the Maples Group during 2024.
Equity strategies remained dominant, with 34% of new open-ended funds launched in 2024 employing equity-based approaches— long/short equity and equity long-only being the most prevalent. Macro, multi-strategy, and fund of funds structures also continued to represent a significant share of new launches.
North American managers were once again responsible for the majority of new fund launches, accounting for more than half of the total, a trend consistent with the past decade. While the regulatory environment for managers remains robust, a sizeable minority of open-ended fund managers are not regulated, reflecting the diversity of participants in the market.
Fund structuring trends continued to show a move away from the traditional “classic” master-feeder model towards more costefficient single-legged master-feeder structures and an increased use of double-legged master-feeder arrangements, especially among Asian and European managers. Stand-alone funds also remained popular, and the Cayman exempted company continued to be the vehicle of choice for both feeder and master funds, with exempted limited partnerships also commonly used.
Independent governance is now firmly established as industry best practice, with most new corporate funds appointing independent directors and partnership structures increasingly introducing independent oversight at the general partner level. The outsourcing of AML officer roles to independent service providers also remained the norm, particularly for larger managers.
Fee structures continued to evolve. The majority of new funds charged both management and incentive fees, but the traditional “2 and 20” model was no longer dominant. Most management fees were set below 2% per annum, while the 20% incentive fee rate remained standard. Series accounting was the preferred method for incentive fee calculation, with equalisation accounting now rare amongst new funds.
Liquidity terms remained broadly consistent with prior years: over three-quarters of funds offered monthly or quarterly redemptions, with the vast majority requiring a notice period of three months or less. Redemption gates were included in more than half of new funds, typically at the fund level, and lock-up periods were imposed by just under half of new funds, most commonly for one year. The use of side pocket powers continued to rise, particularly among Asian managers, providing flexibility for managing illiquid or special situation assets.
Despite a challenging global fundraising environment and mixed investor sentiment, the Cayman Islands open-ended fund market demonstrated resilience and adaptability. Fund structures and terms continued to evolve in response to investor needs, with a strong focus on governance, flexibility and innovation. This adaptability positions the jurisdiction well to meet the demands of a sophisticated and diverse investor base in a changing market landscape.
By advising over a third of all Cayman open-ended funds, we possess a unique perspective of the market, enabling us to identify both international and regional trends. This insight allows us to provide informed advice and guidance to our clients on a wide range of structuring and governance decisions.
Michael Richardson Partner, Global Head
of
Funds & Investment Management
Statistics published by the Cayman Islands Monetary Authority (CIMA) indicate that, as at 31 December 2024, there were 12,858 funds registered under the Mutual Funds Act of the Cayman Islands (MFA). This represents an increase from a total of 10,559 funds in 2017, although it is a slight decrease from the recent peak of 12,995 funds recorded in 2022.
The Maples Group acts for approximately one third of the open-ended funds registered in the Cayman Islands under the MFA. In this report, we share our observations and analysis regarding the CIMA-registered open-ended funds launched by the Maples Group during 2024. The data presented in this report excludes any funds classified as master funds under the MFA, which generally do not have their own offering document.
The Maples Group acts for approximately 1/3 of the openended funds registered in the Cayman Islands.
Investment Strategies
Equity strategies remain predominant with more than a third of open-ended funds launched in 2024 utilising equity strategies. Among these, long/short equity and equity long only are the two most prevalent strategies. Consistent with previous years, macro strategies, multi-strategy and fund of funds also continue to comprise a significant portion of the funds launched in 2024.
34% of funds launched in 2024 employed equity strategies.
Equity Strategies
Multi-Strategy
Investment in Digital Assets
14% of open-ended funds launched in 2024 expressly permit investment in digital assets.
Investment Managers
More than half of all funds launched in 2024 were launched by North American investment managers, continuing the trend observed over the last decade.
Regulation of Managers
A sizeable minority of open-ended launched with an unregulated manager in 2024, broadly consistent with the trend over the last few years.
% of Funds Launched with Regulated Managers
Key Persons
A quarter of new open-ended funds launched in 2024 had at least one female key person named in the offering document. However, only 3% of such funds had a majority of female key persons, indicating that although female participation at senior levels in the industry is increasing, there remains significant progress to be made.
Atleastonefemalekeyperson
There remains a sizeable minority of unregulated open-ended fund managers.
The once dominant “classic” master-feeder structure (comprised of a Cayman corporate master, one Cayman corporate feeder and one Delaware partnership feeder) has been less popular over the last few years. Only 18% of funds launched in 2024 formed part of a “classic” master-feeder structure.
Master-feeder structures are often adopted to fundraise across different investor bases to segregate different types of investors – for example, US taxable investors often invest via a separate feeder to non-US taxable investors. Master -feeder structures still form the majority of funds launched in 2024, although single legged master-feeder vehicles (where only a single feeder fund is established at the time of launch) were more popular than “classic” master-feeder structures in 2024. This may be reflective of the desire by managers to keep costs down where there is no need to segregate the different types of investors, at least at the time of launch, given the relative ease with which an additional feeder fund can be added to the structure at a future date.
The number of “double legged” master-feeder structures comprising of two Cayman feeders also continue to rise, with these comprising 12% of the funds launched in 2024. The use of Cayman corporates for both feeder vehicles has been the industry practice across Asia for over a decade as managers have found that their US taxable investors are just as comfortable with the Cayman structure as they are with the Delaware structure. In Europe, where two Cayman feeders are used, one is often structured as a Cayman corporate (for non- US and US tax exempt investors) and the other as a Cayman partnership, (for US taxable investors) to mirror the legal structure of entities in a “classic” master-feeder structure.
“Stand-alone” funds also remain popular, accounting for almost a third of funds launched in 2024.
Although true single investor funds are not registrable under the MFA, where the investor invests through multiple vehicles, the fund becomes registrable. We also see investors requesting that certain single investor funds register with CIMA, for example, to ensure that the single investor is itself in compliance with its own regulatory or other obligations to investors.
Corporate feeder funds have been less popular over the last 3 years than they have been in prior years; however the exempted company remains the most common structure for feeder funds followed by the exempted limited partnership. This reflects the continued preference for the Cayman exempted company, which is widely regarded as a straightforward and familiar structure, well understood by investors around the world.
Of the funds launched in 2024, only two were structured as limited liability companies (LLCs) comprising less than 1% of funds launched in 2024.
Domicile of General Partners
Cayman exempted limited partnerships must have a qualifying general partner, i.e. a company or partnership domiciled in the Cayman Islands or a foreign company or a foreign partnership registered in the Cayman Islands. For funds structured as partnerships in 2024, a Cayman exempted company was most commonly used as the general partner, although Delaware vehicles were the preferred option for funds launched by US managers.
70% of new open-ended funds were structured as corporates (including SPCs).
Vehicle Type – Master Funds
67% of the funds launched in 2024 had a master fund or other vehicle through which it invests, with the Cayman exempted company being the most popular vehicle for master funds, followed by the Cayman exempted limited partnership, in line with the trend observed in prior years.
Independent Governance
In line with industry practice and expectations, most new open-ended funds have some level of independent oversight.
What proportion of directors are independent?
In the case of corporate funds, 81% of funds launched in 2024 had some independent directors and 70% of funds had all or a majority of independent directors. It is common for corporate funds to have one individual from the investment manager and two independent directors, with those independent directors being from the same service provider.
In the context of partnership funds launched in 2024, approximately a third had some level of independent oversight; with a majority of those introducing independent governance at the level of the general partner, i.e. independent directors appointed to the board of the general partner (or ultimate general partner), particularly where the general partner was domiciled in the Cayman Islands. In some cases independent oversight was implemented through the appointment of a committee of independent persons at the level of the partnership, responsible for approving or consenting to similar sorts of matters usually reserved to the board of directors of a corporate fund.
Are the AML officers independent?
Having independent oversight is also consistent with the outsourcing of AML officers being the norm, with three-quarters of funds launched in 2024 appointing independent external AML officers.
Fund Terms
Umbrella Funds
Approximately 10% of the funds launched in 2024 were set up as umbrella funds, which allow for the creation of multiple sub-funds within a single structure. Umbrella funds can provide several benefits, including overall cost savings, greater operational efficiency, and the ability to establish new sub-funds quickly and easily. These features make umbrella funds an appealing option for certain fund managers and investors.
A majority of the umbrella funds launched in 2024 were structured as Cayman segregated portfolio companies (SPCs), accounting for 57% of cases, which is unsurprising given that the SPC structure offers statutory segregation of assets and liabilities between segregated portfolios which is particularly suited to an umbrella structure. Unit trusts made up 39% of umbrella fund structures, while exempted companies represented the remaining 4%.
Exempted Company
ERISA Investors
69% of the funds launched in 2024 permitted investment by ERISA investors, as managers continue to seek ways to broaden the pool of investors for fundraising purposes. In most cases investment by ERISA investors was only allowed up to the usual limit of 25% to avoid the assets of the Fund being treated as “plan assets” subject to ERISA.
% of Funds Permitting ERISA Investors
Subscription Funding
Capital commitment drawdown structures for funding subscriptions were once rare in the open- ended fund space. However, in recent years, there has been a sizeable portion of funds that utilise capital commitment drawdown structures, hovering at around 15% of funds launched in each of the last two years. The most common investment strategies observed in the case of funds launched in 2024 that utilise capital commitment drawdown structure was private credit and fund of funds.
Are subscriptions fully funded?
Some but not all 2%
Capital Commitment/Draw Down
Caps on expenses
Caps on expenses (organisational or annual) remain relatively uncommon in line with the trend observed in prior years.
No cap on organisational expenses disclosed in the PPM
No cap on annual expenses disclosed in the PPM
Cap on organisational expenses disclosed in the PPM
Cap on annual expenses disclosed in the PPM
Capital Structure – Corporate Funds
It is common for corporate funds to issue non-voting/participating shares to their investors and voting/non-participating shares (often referred to as the “Management Shares” or “Founder Shares”) to another person, for administrative convenience. 87% of corporate funds launched in 2024 had voting/non-participating shares in their share capital.
In most cases, the voting/non-participating shares carry all of the voting rights (other than with respect to material variations to the economic terms which generally require the approval of the investors holding participating shares). However, (due to regulatory reasons) certain funds established by UK managers issue limited voting/non-participating shares that carry certain specified voting rights only to negate the need for investor consent for routine matters such as changes to name, authorised share capital or to provide for the establishment of new share classes. Of the corporate funds launched in 2024 that had voting/non-participating shares in their share capital, in 14% of cases such shares carried limited (rather than full) voting rights.
Of the funds launched in 2024 that had voting/non-participating shares in their authorised share capital, such shares were held by the investment manager or an affiliate in over 60% of such funds. Regulatory and tax considerations are the main reason for someone other than the investment manager to hold the voting/non-participating shares.
Investment manager
Affiliate of the investment manager
Share trustee/star trust arrangement
Nominee arrangement
Currency Classes of Participating Interests Offered to Investors
Only 14% of funds launched in 2024 offered classes, sub-classes and series of participating shares or interests in more than one currency.
Fees
Does the fund charge both management and incentive fees?
In line with the trend observed in prior years, most new open-ended funds still charge both management fees and incentive fees although the classic 2 and 20 fee arrangement is no longer dominant as outlined below.
Management Fee Rate
Of the funds launched in 2024 that charge a management fee, a large majority charged annual management fees at a rate less than 2%.
Incentive Fee Rate
The “classic” 20% incentive fee rate has continued to hold true across the industry (more than 50% of new fund launches).
High watermarks and loss carry forward continue to be standard and consistent features of incentive fee structures, being present in approximately 90% of the funds launched in 2024 that charge an incentive fee.
Accounting for Incentive Fees
In the context of funds launched in 2024 that charge incentive fees, series accounting is the dominant mechanic for ensuring investors are charged incentive fees only on the performance on their shares or interests. Equalisation accounting which was more prevalent in the UK and Europe in the past, has been steadily declining in popularity with only 5% of funds launched in 2024 utilising equalisation accounting.
Incentive fees were structured as an allocation rather than as a fee payable pursuant to the investment management agreement in almost two thirds of funds that charge an incentive fee.
Pass Through Expenses
Pass-through expenses are becoming increasingly common, appearing in nearly 10% of funds launched in 2024. Among the funds that include pass-through expenses, over half are either fund of funds or multi-strategy funds.
9 % Pass-through expenses
91% No pass through-expenses
a class or series of interests in the fund
Liquidity
Over three-quarters of funds launched in 2024 had monthly or quarterly redemption cycles, which is consistent with data from prior years. The vast majority of funds had a redemption notice period of three months or less which is consistent with the trend in previous years.
Frequency of Redemptions/Withdrawals
Notice periods for redemptions/withdrawals
Lock-up Periods
54% of the open-ended funds that launched in 2024 did not have a lock-up period. Of the funds that did impose a lock-up period, 36% had a hard lock-up, 39% had a soft lock-up and 25% had both.
With respect to funds with a lock-up, a year long lock-up period was the most common (in the case of both hard and soft lock-up periods). Of the funds that imposed a soft lock-up period, over 90% of such funds imposed a redemption fee of 2% or more.
62% of funds have a redemption notice period within the range of 1 and 3 months.
Gates
More than half of the funds launched in 2024 had a redemption gate.
Of the funds that had a redemption gate, more than 80% had only one type of gate while the remainder had a combination of fund level gates, class level gates and investor level gates. Fund level gates were the most common with 65% of funds with redemption gates having a fund level gate. Regardless of the type of gate, the threshold for triggering the gate in almost half of the funds with redemption gates was 25%.
The Power to Side Pocket
Over a third of the open-ended funds launched in 2024 had powers to side pocket, reflecting a trend over the last few years to include side pocket powers in fund documentation for new open-ended funds. This is particularly true for the Asia region where almost two thirds of the funds launched in 2024 by Asian managers included side pocket powers. The ability to side pocket gives managers the flexibility to segregate certain investments, hedge against uncertainties in volatile markets and, in some cases, take advantage of private markets.
Of the funds with side pocket powers, participation was mandatory in two third of such funds, at the election of the investor in 11% of such funds, while the remainder had a combination of both. Only 28% of funds with side pocket powers imposed a maximum limit on how much could be invested in side pockets.
2025 Outlook
The Cayman Islands entered 2025 as a preeminent jurisdiction for open-ended fund formation, demonstrating resilience in the face of global market shocks and macroeconomic uncertainty. The first quarter of 2025 has seen hedge funds broadly start the year weaker, with performance turning negative amid heightened volatility and policy shifts in major economies. Despite these headwinds, the Cayman Islands’ tax neutrality, advanced legal framework, and robust financial sector continue to underpin its appeal for fund managers and investors seeking stability and flexibility.
Regulatory Responsiveness and Investor Assurance
Regulatory vigilance remains central to the jurisdiction’s success. The implementation of the Beneficial Ownership Transparency Act, 2023 (BOTA) which is being enforced with effect from January 2025, alongside continued adherence to international standards such as the Common Reporting Standard (CRS) and Anti-Money Laundering (AML) regulations, reinforces the Cayman Islands’ reputation for transparency and compliance. As global regulatory frameworks evolve—particularly in the US and Europe—Cayman’s proactive approach to compliance and investor protection will be critical in maintaining confidence and attracting capital.
Strategic and Structural Evolution
The investment landscape in 2025 is marked by a decisive shift towards risk-averse strategies, reflecting investor preference for lower-risk, less correlated exposures in view of the global macroeconomic environment and ongoing volatility.
Innovation continues to shape the sector, with the trend towards funds explicitly permitting investment in digital asset funds as part of their investment strategy set to continue, and the integration of artificial intelligence and ESG considerations becoming more prevalent. Additionally, there is a growing demand for tokenised funds, as managers and investors seek to harness the benefits of blockchain technology for enhanced efficiency, transparency, and access.
Operational Excellence and Technological Innovation
Operational readiness and scalable technology are now essential for managers aiming to attract and retain institutional capital. Investors expect sophisticated analytics, real-time reporting, and robust risk management, regardless of fund size. The proliferation of investment vehicles and increased reporting requirements have heightened the need for technologydriven solutions and strong partnerships with service providers and prime brokers. Emerging managers, in particular, must balance lean resources with the delivery of institutional-grade infrastructure and reporting to remain competitive.
Looking Forward
The Cayman Islands’ open-ended fund industry is well-positioned to navigate the complexities of 2025. Its enduring strengths—political stability, legal predictability, and professional expertise—will be vital as the industry contends with market volatility, regulatory change, and rapid technological advancement. The jurisdiction’s commitment to best practice, transparency, and innovation ensures it remains at the forefront of global fund trends, providing a stable and responsive platform for managers and investors alike. As the industry continues to evolve, the Cayman Islands is set to sustain its influential role in the international openended fund landscape throughout 2025 and beyond.
Maples is extremely knowledgeable about all types of funds and the local law applicable to those funds. They are also incredibly responsive and have a very deep bench.
