The hedge fund industry continues to grow. At the end of the first half of 2021, almost four trillion US dollars were invested in hedge funds worldwide - more than ever before. On the one hand, the asset class is benefiting from a very good performance over the past two years, but the unabated high inflows of funds from institutional investors are also contributing to the record volume. In the first six months of 2021 alone, investors around the globe increased their capital investment in hedge funds by USD 400 billion. While the asset class is experiencing significant growth worldwide, the picture for Germany is more differentiated. In Germany, investors are mainly limited to regulated hedge funds (UCITS), and only a few also invest their money in offshore hedge funds. If both hedge fund variants are taken into account, the investment volume in Germany is thus lower overall than in other countries. "Unfortunately, many investors in this country shy away from the restrictive requirements for offshore funds and thus miss out on attractive return opportunities. At the same time, the requirements of the legislator can be met safely and quickly with a qualified and structured review of offshore funds," says Marcus Storr, Head of Alternative Investments FERI Trust GmbH. This also explicitly applies to investors subject to German insurance supervision (VAG).
The biggest hurdles to investing in offshore funds are considered to be the notice periods for redemptions of target fund units and the comprehensive supervisory and documentation requirements. But precisely because they do not have to meet the strict liquidity requirements of regulated hedge funds, offshore alternatives often achieve particularly high returns. To help investors better seize opportunities in this area in the future, FERI has developed a structured due diligence process that makes investing in offshore hedge funds in compliance with the law much easier and more transparent. The contracts between hedge fund provider and investor are examined for all legally relevant points and accompanied by legal advice. Among other things, the conditions and fees, portfolio transparency, responsible management, investment policy and the extent of leverage and short selling are examined. A fixed component of the due diligence is also a detailed money laundering check, in which the shareholder structure and the composition of the fund investors are examined. "The due diligence process creates a high level of transparency for investments in offshore funds. In this way, we want to encourage investors to abandon their reluctance and become more involved in this attractive market segment in the future," says Storr.
How institutional investors can overcome regulatory hurdles and invest in offshore funds in a legally secure manner will be discussed by FERI experts led by Marcus Storr, Head of Alternative Investments FERI Trust GmbH, with major investors at the 10th FERI Hedge Fund Investment Day on September 9, 2021. At the online event, globally active hedge fund managers from Dubai, Dublin, Stockholm and New York will also provide an insight into selected strategies and current developments in the hedge fund industry.