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Article: Island hedge funds hold
US$107 billion
Bermuda has a
staggering total of just under $110 billion invested in its hedge funds — that
is, according to the latest issue of Tax Notes.
The article by Martin
Sullivan, contributing editor to Tax Notes' parent company Tax Analysts,
revealed that investors have put in a total of $262.8 billion in Caribbean
region hedge funds, which include those domiciled in Bermuda.
The article forms part of
the Tax Analysts Offshore Project, which works out the assets that non-resident
individuals are investing in financial sectors around the world, and,
potentially avoiding taxes in their home country.
"More than half of the
world's hedge funds are legally domiciled offshore, and the four offshore
leaders are the Cayman Islands, the British Virgin Islands, the Bahamas and
Bermuda," Mr Sullivan wrote.
Estimates from the Hedge
Fund Research Inc (HFR) Industry Report — Year End 2006 show that Bermuda has
$107 billion in hedge fund assets under management, representing 7.7 percent of
the world total and 11 percent globally not including the US, which itself
accounts for 30.1 percent of the world total.
This is a sizeable amount
when compared with the world total which grew from $456.4 billion at the end of
1996 to $1.43 trillion at the end of 2006 as the total number of hedge funds
expanded from 3,616 to 9,462 over the same period.
It also compares
favourably with the Bahamas on $24 billion, but falls short of the totals
invested in the Cayman Islands and the British Virgin Islands, which represent
$470.5 billion and $129.4 billion respectively. All of the 'big four' Caribbean
jurisdictions, in turn, make up 52.3 percent of the world total and 74.9 percent
of the hedge funds domiciled outside the US.
Other findings, this time
by the Hennessee Hedge Fund Advisory Group, estimated a different figure for
hedge fund industry assets of $1.535 trillion at the end of 2006, eight percent
more than that estimated by HFR.
Furthermore, research by
the Lipper TASS Hedge Fund Database, revealed that, according to the 2,873 funds
with total assets reporting in December 2006, Bermuda has $64.3 billion in
estimated assets out of a non-US total of $976.1 billion, with 116 funds, making
up 6.4 percent of that total of 1,818 funds domiciled outside the US, and $27
billion in assets, representing 6.6 percent of the non-US figure of $409.9
billion assets for the end of 2006.
The average of the two
methods of research shows Bermuda to have $85.7 billion in hedge fund assets
under management.
Source: Royal
Gazette article by Alex Wright, 16th January 2008
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