Choosing the right investment fund domicile is one of the first critical decisions that affects everything from tax efficiency and growth strategy to investor confidence and regulatory compliance.
Fund managers and institutional investors have to weigh multiple factors, such as legal frameworks, tax neutrality, reputation, and operational infrastructure, when selecting a jurisdiction to register, launch, or expand an international investment fund.
Among the most prominent global domiciles, the Cayman Islands, Luxembourg, and Singapore consistently rank as top-tier choices, each offering distinct advantages depending on fund strategy and investor profile.
For instance, funds domiciled in Singapore can apply for tax exemption from the Monetary Authority of Singapore. Or, Luxembourg offers tax transparency (income and gains are taxed at the investor level) to funds that are set up in the country as limited partnerships. Similarly, one of the Cayman Islands’ most attractive features is its tax-neutral status — there are no corporate, income, or capital gains taxes on funds.
How to choose an investment fund location?
Fund domicile is the country, or jurisdiction, where an investment fund is registered and regulated. The fund’s domicile determines the legal and regulatory framework for its operations, shaping its structure, taxation and compliance obligations, investment strategies, and investor relations.
Best offshore jurisdiction for US managers: Cayman Islands
The Cayman Islands are globally recognized by institutional investors, particularly US-based managers and asset allocators.
In Q2 2025,the Cayman Islands hosted 13,090 mutual funds and 17,609 private funds through virtually tax-neutral fund vehicles with no corporate, income, capital gains, or withholding taxes. It remains a favored offshore jurisdiction for hedge funds, private equity, and other pooled products.
The Cayman Islands Monetary Authority (CIMA) enforces the Mutual Funds Act, offering regulated and exempt vehicle structures such as licensed, administered, registered, master funds, and segregated portfolio companies (SPC). The Cayman Islands’ legal framework is English common-law-based, reliable, and well-endorsed by global investors.
Best EU jurisdiction for cross-border distribution: Luxembourg
Luxembourg offers favorable fund structuring via UCITS, specialized investment funds (SIFs), reserved alternative investment funds (RAIFs), and others optimized for tax neutrality, double-tax treaty access, and EU passporting across the European Union.
As the largest European fund domicile and the second-largest globally in terms of assets under management (AUM), Luxembourg’s net assets reached EUR 5.77 trillion at the end of May 2025. That amounts to a 5.35% year-on-year increase and EUR 2.1 billion in net inflows for April alone.
Luxembourg’s regulator, the Commission de Surveillance du Secteur Financier (CSSF), maintains a well-developed legal and compliance framework consistent with EU directives. The combination of EU passporting, established regulatory practice, and robust distribution channels offers fund managers confidence and investors comfort.
Best jurisdiction for Asia-Pacific strategies: Singapore
Singapore offers tax-neutral vehicles such as variable capital companies (VCCs) and Singapore Enhancement Services (SES) grants. With the right structure, funds in Singapore may be exempt from withholding tax on distributions to non-resident investors and GST on fund management services, making it a highly efficient jurisdiction for cross-border fund flows.
Singapore’s reputation as a transparent and stable jurisdiction, along with English as an official language and a common-law legal system, makes it increasingly recognized in the global fund marketplace, especially for Asia-focused strategies.
The Monetary Authority of Singapore oversees fund management in the country, with strict governance and disclosure standards aligned with global norms.
Choosing the right location for your fund
With growing demand for global tax neutrality and a strong regulatory environment, each one of the three jurisdictions has its strengths and appeals to different types of investors and fund structures.
| Jurisdiction | Tax considerations | Investor familiarity/scale | Legal and regulatory environment |
|---|---|---|---|
| Cayman Islands | No corporate, income, or capital gains taxes; flexible fund types | Dominant in offshore hedge fund (~52 % AUM), large private-fund count (17,600+), trusted by US institutional managers | Clear regulatory framework under CIMA; English common law; AML compliance credibility renewed after FATF removal |
| Luxembourg | Structuring enables treaty access, EU passporting, and tax-efficient fund wrappers | Second-largest global AUM (~€5.77 tn), ~26 % of European fund assets, strong cross-border distribution (~55 %) | EU-standard, CSSF-regulated; supports specialized fund vehicles (SIFs, RAIFs, ELTIFs) |
| Singapore | Tax neutrality via VCCs, no withholding on distributions to non-residents, strong tax treaty network | Growing prominence in APAC; appealing to Asia-focused LPs and global allocators | MAS-regulated, English common law, robust service infrastructure |
The Cayman Islands stand out as the preferred jurisdiction for hedge funds, private equity, and managers who are targeting global institutional investors, especially from the US, who seek maximum tax neutrality, flexibility, and light onshore regulation.
If you need EU passporting, access to European distribution channels, or structured vehicles under EU directives, Luxembourg is an ideal domicile option, especially for alternative investment funds and mutual funds that adhere to the EU’s Undertakings for Collective Investment in Transferable Securities (UCITS) framework.
For Asia–Pacific credibility and governance, consider Singapore as a jurisdiction for funds with international investors looking to implement stable Asia-based strategies.
When selecting a domicile to establish your fund expanding your reach across borders, manage FX risk with a proven and innovative partner such as Convera, who offers deep expertise in currency hedging strategies for investment funds and provides access to 140+ currencies across 200 countries and territories.
This blog post is provided for general information only and does not constitute legal, tax, financial or investment advice.
