What are “offshore” hedge funds?
Offshore hedge funds are designed to allow non-U.S. Citizens to invest in U.S. securities without being subject to withholdings or capital gains taxes. The funds are domiciled outside the United States usually in a “tax friendly” country where a local company maintains custody and administration of the fund. The Investment Manager, however, may direct the investment strategy of the fund from within the United States. More often than not offshore hedge funds mirror funds that are domiciled in the United States. Primarily, non-U.S. Citizens or non-taxed entities can invest in offshore hedge funds.
