How long does it take to set up a fund?
Although legal structuring can be completed in just 2 to 3 months, in our experience, most managers will take 6 months to launch. This is because some decisions require careful deliberation. Depending on the complexity of the fund strategy and parties involved, delays are often unavoidable. Service providers and other stake holders need to be kept in the loop which will take time. However, once key terms are established, the process can move quickly.
Do I need a prime broker?
Prime brokerage arrangements are common in the hedge fund industry and are particularly attractive to emerging managers who frequently do not have extensive capital or other resources. Prime brokers generally provide custody, back office support, and other services, while the manager concentrates on managing the fund’s portfolio. However, most prime brokers will require minimum fees generated through trade related commissions or financing.
Do I need a custodian?
A custodian is often appointed by a fund to act as guardian of its assets pursuant to the terms of the relevant custodian agreement. If appointed, a custodian will hold in custody all assets of the fund. It may also collect dividends and other payments due in respect of the fund's assets and make dividend and redemption payments. To this end, there can be some overlap between the role of a custodian and the role of an administrator. There is no requirement that a custodian be based in the Cayman Islands. Most Cayman Islands based administrators hold trust licenses pursuant to the Banks and Trust Companies Law (2009 Revision) (as amended) of the Cayman Islands as well.
What’s the difference between a fund administrator and the auditor?
Typically an administrator will be appointed to oversee the day-to-day operations of the hedge fund, and (depending on the terms of the contract between itself and the hedge fund), assist in the calculation of (or make the ultimate determination of) the net asset value ("NAV") of the hedge fund, to process subscriptions and redemptions, to act as registrar and transfer agent and usually undertake anti-money laundering ("AML") procedures on behalf of the hedge fund. The administrator will also usually coordinate the opening of a bank account for the fund to deal with subscriptions and redemptions.

In addition, a Cayman regulated or licensed fund will need to appoint Cayman based and CIMA approved auditors. A regulated mutual fund is obliged to file its financial statements audited by an approved auditor and fund annual return form within six months of its financial year end. Furthermore, the accounts of regulated funds are required to be audited by an approved Cayman Islands based audit firm (or be audited by another audit firm but be signed-off by an approved Cayman Islands based audit firm). The auditor has certain reporting obligations to CIMA under the Mutual Funds Law regarding the operations of a fund that it audits.
Do I need any registrations or licenses to operate a fund?
If the fund manager is located and operates from offshore which is the same jurisdiction as the hedge fund itself, it is not subject to the licensing or regulatory requirements of Hong Kong. The fund manager will have day to day investment discretion for the hedge fund. It may appoint an investment adviser to provide it with (non-discretionary) investment advice. However, if a firm carries on a business in the regulated activities in or from Hong Kong, or holds itself out as carrying on such a business, it is required to set up a presence in Hong Kong and be appropriately licensed by the Securities and Futures Commission (“SFC”).
What is the preferred hedge fund structure for Hong Kong based manager?
The preferred hedge fund structure for Hong Kong based managers and advisors tend to be offshore limited liability company. The main factors determining this preference is investor familiarity, and that such a vehicle is relatively low risk to the hedge fund manager (ie. It has a separate legal entity distinct from the management functions, and is easy to operate with respect to day-to-day subscriptions and redemption of shares). Furthermore, offshore jurisdictions used such as Cayman Islands, British Virgin Islands, and Bermuda are tax neutral. Currently, Cayman Islands remains the favorite for hedge funds where BVI has traditionally been preferred for private equity funds.
What is the typical fee structure for a hedge fund?
Typically investors in a hedge fund will pay the manager a management fee and a performance fee. The management fee, paid either quarterly or monthly, will range from 1—2% of AUM. The performance fee is generally assessed annually (although some managers will assess the fee frequently as quarterly) and typically is 20% of the fund’s profits (subject to a “high water mark”). It also depends on the complexity of your fund. Despite a growing trend for fee compression in long-only and long-biased funds, there will always be a market for outperformers. Economics are also a point of negotiation with early investors and seeders, which can be addressed either through separate share classes or side letters.
Do I have a choice which professional providers I use?
Yes. OPIM has established relationships with the best professional service providers in the industry. However, if you’re setting up a standalone fund, you’re free to choose which provider you feel best suits the needs of your fund.

OPIM’s Sunrise SPC platform has already engaged a series of professional partners, brokers, and independent directors, so funds launched through this process enjoy the benefit of just plugging into the current arrangements with hedge fund industry leaders.
We use cookies to improve the website performance and user experience. If you continue to use this website, you are agreeing to their uses. Learn more about our Policy Disclosure.


Terms of Use and Disclaimers



OP Investment Management Limited (“OPIM”) is a regulated institution in Hong Kong by the Securities and Futures Commission (“SFC”).


This website contains information about OPIM and may reference services and products offered by OPIM.


By proceeding, you are representing that you have understood and accept the restrictions set out in this section.


The website is prepared by OPIM and has not been reviewed by the SFC.



Legal and sales restrictions


The contents of this site are intended for Professional Investors’ use only. “Professional Investor” has the meaning ascribed to it in the Securities and Futures Ordinance (Cap 571) (“SFO”) and its subsidiary legislation. If you are not a “Professional Investor”, you shall not accept these Terms of Use and Disclaimers.


The contents of this site are not intended for distribution to any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) OPIM or its affiliates would be subject to license or registration requirements of that jurisdiction, or the publication or availability of the contents is prohibited.


You are responsible for observing all applicable laws and regulations of the relevant jurisdictions before proceeding to access the information contained herein. All information on this Website is solely prepared for communications with persons which are authorized to receive such information under applicable laws.

No Offer


This site is for informational purposes only. Neither the information nor any opinions contained in this site constitutes a solicitation or offer by OPIM or any of its affiliates to buy or sell, whether as principal or agent, any securities, futures, options or other financial instruments or provide any related service or investment advice in any jurisdiction or country where such distribution or use would be contrary to local laws or regulations. The information contained in these pages is not intended as any investment advice. Persons accessing these pages should obtain appropriate professional advice when necessary.



No Warranty


Although the information on this site is obtained or compiled from sources believed to be reliable, OPIM cannot and does not warrant the accuracy, validity, reliability, timeliness or completeness of any such information.


OPIM expressly disclaims any warranties of merchantability or fitness of a particular purpose or duties of care. All information on this site is provided "as is", and is subject to change without prior notice.



Limitation of Liability


In no event will OPIM or its affiliates be liable or have any responsibility for damages of any kind, whether direct, indirect, special, consequential or incidental, resulting from access or use of, or inability to access or use, this site or any sites or pages linked to this site, including (without limitation) damages resulting from the act or omission of any third party, even if OPIM or its affiliates has been advised of the possibility thereof. OPIM and its affiliates assume no responsibility for ensuring that the functioning of this site will be uninterrupted or error-free.



Use of Links


Should the viewer leave this site via a link contained herein, and view content that is not provided by OPIM, the viewer does so at its own risk. OPIM is not responsible for damages or losses caused by any delays, defects or omissions that may exist in the services, information or other content provided in such site, whether actual, alleged, consequential or punitive. OPIM makes no guarantees or representations as to, and shall have no liability for, any electronic content delivered by any third party or have any responsibility, including without limitation, the accuracy, subject matter, quality or timeliness of any electronic content.



Copyright and Trademarks


OPIM and other parties own the trademarks and logos displayed on this site. These may not be used without the written permission of OPIM or the party owning these. Also, the information on this site are protected by copyright and no part of it may be copied, transmitted, disseminated, sold, distributed, published, broadcasted, circulated, stored for subsequent use or commercially exploited in any manner without the prior written consent of OPIM.



Internet Security


OPIM does not represent or warrant that no viruses or other contaminating or destructive properties will be transmitted or that no damage will occur to your computer system. You hereby acknowledge and confirm that the internet is not a secure medium where privacy can be ensured, and that complete security and confidentiality over the internet is not possible at this time.


You have sole responsibility for adequate protection and back up of data and/or equipment and for undertaking reasonable and appropriate precautions to scan for computer viruses or other destructive properties.


OPIM shall not be responsible or liable for any harm that you may suffer in connection with any such breach of confidentiality or security.


OPIM also makes no representations or warranties regarding the accuracy, functionality or performance of any third party software that may be used in connection with this site.





The information contained on this site is subject to modification and update from time to time without notice.



Additional Terms


Certain sections or pages on this site may contain separate terms and conditions which are in addition to these terms and conditions. In the event of a conflict, the additional terms and conditions will govern for those sections or pages.



Governing Law


Use of this site shall be governed by the laws of Hong Kong Special Administrative Region.