Nominal, Segregated Accounts for Funds 

At IFB, we prioritize the security, transparency, and integrity of your investments. To ensure the highest level of asset protection, we offer nominal segregated accounts for funds, providing you with dedicated accounts that are solely in your fund’s name. 

What Is a Nominal Segregated Account? 

A nominal segregated account is a unique account established exclusively in the name of your fund. Unlike omnibus accounts, which consolidate assets from multiple clients, a nominal segregated account keeps your assets entirely separate from those of other clients and the institution itself. This segregation ensures clear ownership and enhances the safety of your investments. 

Benefits of Nominal Segregated Accounts 

• Enhanced Security 
• Asset Protection: Your assets are insulated from the liabilities or risks associated with other accounts.  
• Regulatory Compliance: Meets global regulatory standards by clearly delineating asset ownership. 
• Transparency and Control 
• Clear Reporting: Receive detailed statements specific to your account, facilitating easier auditing and compliance. 
• Direct Oversight: Maintain direct insight into all transactions and holdings within your account. 
• Operational Efficiency 
• Simplified Processes: Streamlines settlement processes and reduces administrative burdens. 
• Customized Services: Tailored account management to fit the unique needs of your fund. 

Why Choose for Segregated Accounts? 

• Dedicated Support 
• Expert Team: Our professionals specialize in fund management and are committed to providing personalized service. 
• Client-Centric Approach: We work closely with you to understand and meet your specific investment objectives. 
• Advanced Technology 
• Secure Platforms: State-of-the-art security measures protect your account information and transactions. 
• Real-Time Access: Monitor your account activities and balances with our user-friendly online portals. 
• Compliance Assurance 
• Regulatory Expertise: We ensure all aspects of your account comply with the latest financial regulations. 
• Audit Support: Comprehensive documentation and support for any regulatory reviews or audits. 

How to Get Started 

 1. Contact Us 

• Reach out to our team to discuss your fund’s needs and how a nominal segregated account can benefit you. 

 2. Account Setup 

• We’ll guide you through the onboarding process, ensuring all regulatory requirements are met efficiently. 

 3. Fund Your Account 

• Securely transfer your assets into your new segregated account. 

 4. Ongoing Management 

• Enjoy peace of mind as we manage your account with the highest level of professionalism and transparency. 

Connect With Us Today 

Secure your fund’s assets with the confidence that comes from working with industry leaders. 
 

At IFB your success is our priority. Trust us to provide the secure and transparent financial solutions your fund deserves.

Fund in the Bahamas

Managing a fund in the Bahamas is governed by a robust regulatory framework designed to ensure transparency, investor protection, and compliance with international standards. The primary legislation includes the Investment Funds Act, 2019 (IFA), which was enacted to align with global regulations and enhance the Bahamas’ reputation as a leading financial center. Here are the key regulatory requirements and considerations:

1. Types of Investment Funds

• Standard Fund: Targeted towards retail investors, subject to the most stringent oversight due to its broad accessibility.
• Professional Fund: Intended for sophisticated investors who meet specific financial or experience criteria, typically subject to fewer regulations.
• SMART Fund: A flexible structure, designed for niche markets and tailored investment solutions, often used for private or restricted investment purposes.
• ICON (Investment Condominium): A unique, flexible fund structure offering advantages for Brazilian investors and legal recognition in Brazil.

Each fund type has distinct requirements, particularly regarding reporting, disclosures, and oversight.

2. Fund Managers and Administrators

• Licensing: Fund managers must be licensed by the Securities Commission of the Bahamas (SCB). They must demonstrate financial soundness, competence, and integrity.
• Physical Presence: There is generally a requirement for a physical presence in the Bahamas, although some exemptions may apply for foreign managers under specific conditions.
• Compliance and Risk Management: The manager must have robust compliance and risk management frameworks, including anti-money laundering (AML) and know-your-customer (KYC) protocols.

3. Regulatory Oversight and Compliance

• Securities Commission of the Bahamas (SCB): The SCB oversees and enforces fund management activities. It requires regular filings, compliance reports, and may conduct audits or inspections.
• AML and KYC Obligations: The Bahamas adheres to strict AML and KYC requirements to comply with international standards, including the Financial Action Task Force (FATF) guidelines. All clients and investors must be vetted to prevent illicit activities.
• Periodic Audits: Funds are required to undergo annual independent audits, with reports filed to the SCB.

4. Capital Requirements

• Minimum Capital: Fund managers may need to meet specific minimum capital requirements, depending on the type and size of the fund.
• Net Asset Value (NAV) Reporting: Regular NAV reporting is typically required for transparency, particularly for Standard and Professional Funds.

5. Reporting and Disclosures

• Offering Memorandum: Funds must provide an offering memorandum to investors, outlining the fund’s objectives, risks, fees, and management structure.
• Annual Reporting: Regular financial and compliance reports must be submitted to the SCB. This includes audited financial statements, often with quarterly or semi-annual updates depending on the fund type.
• Investor Communications: Transparent communication with investors is essential, including disclosures of any material changes in the fund’s structure, fees, or management.

6. Taxation and Fiscal Benefits

• Tax Neutrality: The Bahamas offers tax-neutral structures for offshore funds, meaning that there are no taxes on income, capital gains, or dividends for funds operated by non-residents.
• Exchange Control: There are no exchange control restrictions for foreign investors, making the Bahamas an attractive jurisdiction for international funds.

7. Fund Custodianship

• Custodians: While not mandatory, the use of a licensed custodian is often recommended for enhanced investor protection. Custodians must meet specific regulatory standards and are responsible for safeguarding fund assets.
• Segregated Accounts: To prevent commingling of assets, funds are often required to maintain segregated accounts, ensuring clear separation between client and fund assets.

8. Ongoing Regulatory Updates

• Adherence to International Standards: The Bahamas frequently updates its regulatory framework to align with evolving international standards, such as the OECD and FATF.
• Regular Compliance Checks: Fund managers must stay updated on regulatory developments, as non-compliance can lead to penalties or revocation of the fund’s operating license.

Steps to Establishing a Fund in the Bahamas:

1. Choose Fund Type: Decide on the appropriate fund type (Standard, Professional, SMART, ICON) based on target investors and strategy.
2. Prepare Documentation: Develop an offering memorandum, compliance manuals, and fund governance documents.
3. Secure Licensing: Apply for a fund license with the SCB, providing details about the fund’s structure, compliance measures, and financial projections.
4. Set Up Bank and Custody Accounts: Establish accounts for holding fund assets, ensuring they meet SCB’s requirements.
5. Launch and Compliance: Begin operations with a focus on meeting all ongoing regulatory obligations, including audits, disclosures, and investor communications.

Operating a fund in the Bahamas provides access to a well-regulated, tax-efficient environment. By adhering to these regulatory requirements, fund managers can foster investor trust, maintain regulatory compliance, and capitalize on the benefits offered by the Bahamas as a premier financial jurisdiction.

Other Fund locations

Several prominent fund jurisdictions exist globally, each with unique regulatory frameworks, tax benefits, and reputations within the investment community. Here are some of the key locations of importance, particularly noted for their attractive environments for fund management:

1. Cayman Islands

• Overview: The Cayman Islands is one of the most prominent offshore fund jurisdictions, known for its efficient regulatory environment and lack of direct taxes on capital gains, income, or profits.
• Fund Types: Mutual funds, hedge funds, private equity funds, and venture capital funds.
• Regulation: Overseen by the Cayman Islands Monetary Authority (CIMA), known for its flexible yet comprehensive regulations.
• Benefits: Tax neutrality, no exchange controls, and a sophisticated legal system based on English common law.
• Popular for: Hedge funds, private equity, and other institutional funds due to a robust, fund-focused infrastructure.

2. Luxembourg

• Overview: A leading European hub for fund management, Luxembourg is known for its strict regulatory standards and investor protection.
• Fund Types: UCITS (Undertakings for Collective Investment in Transferable Securities), SICAVs (Investment Company with Variable Capital), SIFs (Specialised Investment Funds).
• Regulation: Supervised by the Commission de Surveillance du Secteur Financier (CSSF).
• Benefits: EU passporting rights for UCITS funds, allowing them to be marketed across the EU; tax-efficient structures, particularly for private equity and real estate funds.
• Popular for: European and international funds looking for an EU-compliant regulatory framework.

3. Ireland

• Overview: Ireland is an EU member and a popular domicile for funds, especially those targeting European investors, known for its efficient tax regime and regulatory system.
• Fund Types: UCITS, QIAIFs (Qualifying Investor Alternative Investment Funds), ETFs.
• Regulation: Overseen by the Central Bank of Ireland, providing a stable regulatory framework and strong investor protections.
• Benefits: Access to EU markets, efficient tax treaties, and established infrastructure for funds, including administration and custodial services.
• Popular for: UCITS and ETFs due to strong European investor appeal and access.

4. Singapore

• Overview: A major financial hub in Asia, Singapore offers a highly reputable jurisdiction for funds, particularly for those targeting Asian markets.
• Fund Types: VCC (Variable Capital Companies), hedge funds, private equity, venture capital.
• Regulation: Managed by the Monetary Authority of Singapore (MAS), known for a stringent regulatory framework ensuring high standards.
• Benefits: Tax exemptions for offshore funds, a skilled workforce, robust infrastructure, and access to Asian markets.
• Popular for: Asian-focused funds, venture capital, and private equity, due to regional proximity and tax incentives.

5. Hong Kong

• Overview: Hong Kong remains a significant fund management center for Asian and global markets.
• Fund Types: Open-ended fund companies (OFC), hedge funds, private equity funds.
• Regulation: Supervised by the Securities and Futures Commission (SFC), providing a high level of oversight and protection.
• Benefits: No capital gains or withholding tax, strong investor protection laws, and proximity to the Mainland Chinese market.
• Popular for: Funds targeting Asian investments, especially with opportunities in Mainland China.

6. Switzerland

• Overview: Known for its established wealth management sector, Switzerland offers a stable environment and a high standard of regulatory compliance.
• Fund Types: SICAVs (Investment Company with Variable Capital), private equity, real estate, hedge funds.
• Regulation: Managed by the Swiss Financial Market Supervisory Authority (FINMA).
• Benefits: Tax efficiency, strong investor protections, and a high level of privacy for investors.
• Popular for: High-net-worth individual and institutional funds, given Switzerland’s wealth management reputation.

7. British Virgin Islands (BVI)

• Overview: The BVI is popular for its simplicity and cost-effectiveness in establishing funds, offering a straightforward regulatory process.
• Fund Types: Mutual funds, hedge funds, private equity funds.
• Regulation: Overseen by the BVI Financial Services Commission.
• Benefits: Tax neutrality, simplified regulatory requirements, and no capital gains or withholding taxes.
• Popular for: Start-up funds and smaller private funds due to low cost and efficient setup.

8. Delaware, United States

• Overview: Delaware is known for its business-friendly corporate laws and is a preferred jurisdiction for private equity and hedge funds in the United States.
• Fund Types: Limited partnerships, hedge funds, private equity funds.
• Regulation: Governed by U.S. securities law, and the Securities and Exchange Commission (SEC) has jurisdiction over compliance and regulation.
• Benefits: Established legal framework, tax benefits for out-of-state investors, and reputable fund administration services.
• Popular for: U.S.-based private equity and hedge funds looking for a reputable, investor-friendly jurisdiction.

9. Malta

• Overview: Malta is a rising EU-based fund jurisdiction with a favorable tax regime and strong regulatory framework.
• Fund Types: PIFs (Professional Investor Funds), UCITS, REITs.
• Regulation: Supervised by the Malta Financial Services Authority (MFSA), known for a pragmatic approach to regulation.
• Benefits: EU passporting rights, tax-efficient structures, and growing fund administration infrastructure.
• Popular for: Professional and alternative investment funds targeting EU investors, with a focus on flexibility and tax efficiency.

10. Jersey and Guernsey (Channel Islands)

• Overview: These islands are known for their stability, well-regarded legal systems, and are popular choices for UK and European investors.
• Fund Types: Private funds, hedge funds, private equity, real estate.
• Regulation: Managed by the Jersey Financial Services Commission (JFSC) and the Guernsey Financial Services Commission (GFSC), both providing high regulatory standards.
• Benefits: Tax-neutral structures, no capital gains or withholding taxes, and respected legal frameworks.
• Popular for: Alternative investment funds, private equity, and real estate funds due to tax advantages and robust investor protections.

These jurisdictions each offer specific advantages based on tax policies, regulatory environments, and regional access. Fund managers and investors often select a jurisdiction that best aligns with their investment goals, target market, and operational needs.

Creating and Managing Investment Funds

Introduction to Investment Funds

Investment funds play a pivotal role in global finance, offering a structured way to pool capital and pursue a wide range of investment strategies. Through funds, investors can access diverse asset classes, professional management, and the potential for substantial returns. The right fund structure, location, and management approach are essential for aligning with investor goals and ensuring long-term success.

1. Types of Investment Funds

Hedge Funds

Focused on high-risk, high-return strategies, hedge funds often use leverage, derivatives, and short selling. They are typically structured as private investment partnerships accessible to sophisticated investors.

Mutual Funds

These are pooled investment vehicles that diversify across securities such as stocks and bonds. Governed by regulatory standards, mutual funds offer accessibility, transparency, and liquidity for retail investors.

Private Equity Funds

Targeting private company investments, private equity funds focus on value creation through ownership, restructuring, and strategic development.

Venture Capital Funds

These funds invest in early-stage companies with high growth potential, providing essential capital to fuel innovation and expansion.

Real Estate Investment Trusts (REITs)

REITs offer investors a way to access income-generating real estate, structured for steady returns and tax advantages.

2. The Fund Creation Process

Fund Creation Flowchart

1. Define Investment Goals and Select Fund Type

Establish the primary investment objectives and determine the most suitable fund type based on those goals. Options may include hedge funds, private equity funds, mutual funds, or real estate funds. 

 2. Choose Jurisdiction (Cayman, Luxembourg, etc.)
Select the jurisdiction where the fund will be domiciled, based on regulatory requirements, tax implications, and investor needs. Key jurisdictions include the Cayman Islands, Luxembourg, Ireland, Singapore, and the British Virgin Islands. 

 3. Structure Fund (Master-Feeder, Umbrella, etc.)
Decide on the fund structure, such as a master-feeder setup or umbrella fund. This step ensures alignment with the fund’s investment strategy, investor base, and jurisdictional considerations. 

 4. Prepare Legal Documents (Offering Memorandum, etc.)
Draft essential legal documents, including the Offering Memorandum, Partnership Agreement, and Subscription Agreements. These documents provide transparency on fees, risks, fund strategy, and governance. 

 5. Licensing and Registration (Regulatory Compliance)
Complete the necessary registration and licensing with regulatory authorities in the chosen jurisdiction. This step involves compliance with local laws, such as Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements. 

 6. Set Up Custodian and Administrator
Engage a custodian to protect fund assets and an administrator for operational support, including NAV calculations and investor reporting. Custodian and administrator roles vary based on the fund type and jurisdiction. 

 7. Fund Launch and Investor Outreach
Finalize the launch of the fund, initiate marketing, and communicate with potential investors. This step often involves investor roadshows, presentations, and distribution of marketing materials to attract capital. 

Choosing the Right Structure

Selecting a fund structure depends on investment objectives, target investors, and jurisdictional considerations. For example, an open-ended structure allows for flexible redemption, while closed-ended structures offer stability for longer-term investments.

Feeder Funds and Master-Feeder Structures

Feeder funds pool capital to invest in a master fund, a structure that allows efficient centralized management across multiple jurisdictions. This approach offers scalability and simplicity for fund managers dealing with diverse investor bases.

Side Pockets

For funds with illiquid assets, side pockets can isolate these holdings, ensuring liquidity for the core assets while allowing for structured management of less liquid investments.

Regulatory Requirements and Licensing

Each jurisdiction mandates specific regulatory and licensing requirements. This step includes compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) protocols, necessary to meet global standards.

Fund Documentation

Drafting core documents, such as an Offering Memorandum and Partnership Agreement, is essential. These documents provide transparency on risks, fees, and fund governance, fostering investor confidence.

Fund Structures and Considerations in Depth

Feeder Funds and Master-Feeder Structures

A master-feeder structure consolidates capital from multiple feeder funds into a central master fund. This structure supports scalable investment strategies, making it ideal for funds with a diverse international investor base.

Umbrella Funds and Segregated Portfolios

An umbrella fund contains multiple sub-funds, each with its own assets and liabilities, allowing different strategies under one entity.