Use of Fund of Funds Structures by Family Offices
In the intricate world of investment, Family Offices stand as strategic agents managing the wealth and financial affairs of high-net-worth families. Their influence in the investment landscape has expanded and with their greater access to private markets, they’re now paving the way for a wider group of investors to tap into these opportunities through the establishment of Fund of Funds structures, often set up in jurisdictions with flexible fund regimes such as Jersey.
Contributors
Private Equity funds present a potentially lucrative yet often exclusive opportunity, typically only accessible to institutional investors or ultra-high-net-worth individuals through large, established, Family Offices or wealth managers. Recently, we have seen a trend of Family Offices, equipped with significant resources and experience, opening up access to these funds by establishing a fund of funds program for a select portfolio of Private Equity investments. This provides access to these underlying PE investments for investors who would otherwise not have the chance, as well as generating liquidity for further or more diverse investment opportunities.
Jersey is one of the world’s major international financial centres and offers a range of fund types and structures. It is a stable, reliable, well-regulated and tax efficient environment for setting up fund of funds structures that aim to widen access to private markets, The Jersey Private Fund regime (‘JPF’), for example, means that family offices are able to set up a tax efficient vehicle, subject to light touch regulation in a relatively contracted timeframe. These family offices should also consider their own regulatory status as it relates to managing investments, particularly in the UK where they may be required to obtain direct authorisation or act as an appointed representative if they are either marketing to other family offices, or deemed to be advising on investments. Benefits of the Jersey Private Fund regime include:
- May be offered to up to 50 professional investors
- No limit on fund size
- Receives fast-track approval from the regulator in 48 hours
- No prior approval required from the regulator
- Open to ‘professional’ investors and/or those investing £250k or more
- Not required to appoint an auditor, subject to any AIFMD reporting requirements
- No requirement to issue an offer document, subject to any AIFMD/SFDR disclosure requirements
If you are considering establishing a fund or fund of funds structure specific operational expertise will be required. Our team has a wealth of experience in establishing Jersey fund structures, partnering with our clients from initial set-up and on-boarding to business as usual throughout the life of the fund.
