Experienced Investor Fund
In October 1999 a major new funds initiative for fund promoters targeting skilled global investors, was launched in the Isle of Man. The Experienced Investor Fund (EIF) was created to provide a niche opportunity for managers in the international, private and hedge funds industry.
The EIF is the first scheme of its kind, and provides for a different type of funds activity through a redefinition of the regulatory framework. International fund managers now have the option of using "alternative investment" strategies as well as conventional investments within a purpose made fund framework in the Isle of Man.
On the launch of the EIF Michael Gates, head of the Treasury's International Services Division, said : "The EIF is designed to be simple and flexible to administer, and is aimed at global investors with a high degree of experience. These will include sophisticated high net worth individuals, market professionals and global asset managers.
"We have some major names on the Isle of Man in fund administration and in consultation with industry Government was able to come up with a scheme pitched at the experienced investor that offers a high level of flexibility."
A facility was also included in the new scheme to allow existing Isle of Man exempt international funds to convert to EIFs. So existing, exempt Isle of Man funds which use alternative investment strategies but which are currently constrained by a limit of 50 on the maximum number of investors can expand as there is no limit on the number of EIF investors. The funds in this category are estimated to be worth US$ 2-3 bn. compared with US$ 10.5 bn contained within the other fund classes regulated within the Island.
While the EIF itself is not subject to Isle of Man regulation, the regulatory focus will be on the local third party administrator, who will be closely scrutinised by the Island's Financial Supervision Commission (FSC) and a custodian will also be required to hold the assets. There are also be clear disclosure requirements to ensure there are no hidden risks for the investor as well as a statutory minimum entry level of US$ 15,000. The fund itself is only designed for those who understand the risks associated with investment in the EIF and who will have to render a declaration to this effect.
In its first four months the EIF proved to be extremely popular attracting 26 new funds worth $US1.05bn.
Investment Funds
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