Structure and participation of hedge funds, Financial Management

Structure and Participation of Hedge Funds:

The typical structure for a Hedge Fund is to facilitate the tax concerns of investors and fund managers. Basically, there are two or more pooling vehicles that serve the particular needs of the various types of investors. These are investment vehicles treated as a flow-through vehicle for taxable investors. They are typically Limited Partnerships (LPs) or Limited Liability Corporations (LLC), and allow the tax attributes of various investments to pass through directly to investors. The second pooled investment entity is typically a non-domicile or offshore corporation. This corporation is generally established in one of the tax haven jurisdictions, such as the Cayman Islands or Bermuda, especially for investment in US companies (or Mauritius for investment in India). This vehicle is structured in such fashion that it is to be treated as a corporation for tax purposes. Generally, in a corporation form of structure, investors are tax-exempt and non-resident investors, who are looking to have the tax characteristics of the underlying income, which would not pass through directly to them but be truncated.

There are other forms of business structure available that are not suitable for Hedge Funds; they are discussed as follows. The general partnership structure implies that each partner is jointly responsible for debts and losses that occur in a partnership; the personal assets of the partners are also attached. The domestic corporation form of structure results in double taxation. Therefore, generally limited partnership is a dominated structure in the domestic Hedge Funds and Corporation form for offshore Hedge Funds in tax-friendly countries in the Hedge Fund industry.

Posted Date: 9/11/2012 2:08:45 AM | Location : United States







Related Discussions:- Structure and participation of hedge funds, Assignment Help, Ask Question on Structure and participation of hedge funds, Get Answer, Expert's Help, Structure and participation of hedge funds Discussions

Write discussion on Structure and participation of hedge funds
Your posts are moderated
Related Questions
List and explain the three financial factors that influence the value of a business. The three factors that influence the value of a firm's stock price are timing , cash flow

Who owns a credit union? Explain. The term Credit unions are owned by their members. While credit union members put money in their credit union, they are not exactly "depositin

Homework 1. Suppose you deposit $18,000 into an account today that earns 6% interest per year, and you do not withdraw the money for 21 years. What will be the balance in the acco

Profitability Index (PI) : It is a ratio of the present value of the total cash benefits to the present value of the net cash outlay.  The higher the PI, the higher the return.

Q. Explain Dividend Policy Decision? Dividend Policy Decision: - The financial management has to make a decision as which portion of the profits is to be distributed as dividen

Question 1: (a) Explain fully the following financial accounting techniques: i. Cash accounting ii. Accrual accounting iii. Fund accounting iv. B

BigGardens Ltd (BigGardens) is a private company that owns and operates a chain of garden centres in the Bristol area.  The company has expanded rapidly over recent years, opening

I NC O terms You learnt that specifications, delivery period and destination are all dependent  factors   on  a   particular   project.  Let   us  know  about   the internati

Foreign Exchange Market Equilibrium: We say that the foreign exchange market is in equilibrium when deposits of all currencies o er the same expected rate of return (when retu

Functions of a Stock Exchange The stock exchange is a market place where investors trade in securities. It is a competitive market involving large numbers of buyers and sellers