In this guide we compare the five types of open-ended funds in the British Virgin Islands (the “BVI”), being private funds, professional funds, public funds, incubator funds and approved funds (this guide does not cover closed-ended funds that are governed by the Private Investment Funds Regulations, 2019).
In short, open-ended funds give investors the right to redeem their fund interests on demand, subject to the terms of the fund documents and certain lock-up periods. These funds need to be regulated in the BVI by the BVI Financial Services Commission (the “FSC”).
Whilst professional funds are still the most popular, representing 70% of the BVI funds market, we are seeing a significant increase in both incubator and approved funds. This is because these relatively new funds are very cost effective and lightly regulated. The incubator fund is a start-up fund which offers managers a straightforward, economical solution for implementing an investment strategy with low up-front costs and limited on-going obligations, which is very popular in the fintech sector. The approved fund is usually aimed at the “friends and family” market, like a private fund but with less stringent regulation and lower on-going costs.
