Hi everyone, we hope you’re doing well. This month, we want to walk you through Family Investment Funds, what they are, why families turn to them, and what makes them worth considering.
Let’s start at the beginning: what exactly is an investment fund?
An investment fund is an arrangement in which a group of investors pool assets or capital into a collective scheme, relinquishing day-to-day control and direct ownership of those assets to an operator, typically a professional investment manager. When we talk about an offshore investment fund, we’re referring to that same structure established in an offshore financial center such as the BVI, Cayman Islands, Bermuda, and others.
That covers the definitions. But definitions only go so far. The more interesting question is: what leads a person or family to consider an investment fund in the first place?
Protecting what matters
Many families today manage assets that are increasingly mobile — spread across multiple jurisdictions, subject to different legal frameworks, and generating income that varies not just in amount, but in source and origin. Investment funds give these families a structured, independent, and professionally managed environment where family wealth can be consolidated, safeguarded, and distributed according to each member’s individual needs.
Common goals among families who set up investment funds include:
- Protecting the continuity of the family business
- Supporting family governance
- Sustaining a reasonable return on capital
- Preventing excessive spending
- Optimizing the tax burden
- Keeping assets within a secure structure
- Strengthening personal security for families based in higher-risk countries
When a family fund is structured, a family-appointed investment manager handles day-to-day investment decisions; an administrator calculates net asset values; and an independent auditor verifies financial records and accounting methods. Far from bureaucratic, this represents professional-grade oversight, ensuring access to industry best practices and compliance with both local and international regulations.
Is offshore the better choice?
Is offshore the better choice?
Establishing an investment fund in an offshore jurisdiction comes with meaningful advantages. These centers typically offer greater flexibility when defining investment strategies and objectives, in other words, fewer regulatory constraints. Their governments tend to be private-sector friendly, regulating with the intent of sustaining a healthy financial industry. Offshore hubs also bring deep experience in fund structures, supported by specialized law firms, fund administrators, custodians, and accounting and audit firms that know the space well. They offer strong financial and property protection as well as favorable tax treatment.
Funds — whether offshore or onshore — can be open-ended (investors may redeem shares at regular, specified intervals) or closed-ended (no redemption rights; commonly used for real estate projects or private investment vehicles). There are many variables to consider when structuring a fund: the choice of jurisdiction is a significant decision in itself, as is whether to establish onshore or offshore.
But one thing remains constant, regardless of where a family or individual stands: the fundamental question is always about protection.
That’s why at UNTITLED, we have long provided services related to offshore investment funds — and why, some years ago, we created UNTITLED Funds Services, where we work specifically with funds that have a Latin American component.
