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Exploring the Funds Hub

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by Harneys

64 episodes

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Podcast Overview

Exploring the Funds Hub is a captivating podcast series containing audio of written content that dives deep into the intriguing world of offshore funds, including the BVI and Cayman. Each episode sails through complex waters, bringing you up-to-date analysis and expert commentary from the leading minds in this specialised field. Our episodes demystify legal jargon and break down complex terminology to make them accessible to all. Harneys, an international law firm with entrepreneurial thinking, brings each episode to you.

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Publishing Since

8/17/2015

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Recent Episodes

Episode thumbnail for SFDR Article 6 funds: meaning, scope and market practice
What is an SFDR Article 6 fund?
Where are SFDR Article 6 funds commonly established?
How Article 6 differs from SFDR Articles 8 and 9
Interaction between SFDR and non-EU fund structures
How Harneys can help

June 16, 2026

SFDR Article 6 funds: meaning, scope and market practice What is an SFDR Article 6 fund? Where are SFDR Article 6 funds commonly established? How Article 6 differs from SFDR Articles 8 and 9 Interaction between SFDR and non-EU fund structures How Harneys can help

The Sustainable Finance Disclosure Regulation (SFDR) is one of the most consequential pieces of EU financial regulation to emerge in recent years. It establishes a classification framework for financial products based on their sustainability characteristics, dividing them broadly into three categories under Articles 6, 8 and 9. While much of the market's attention has focused on the higher-tier classifications - Article 8 (products that promote environmental or social characteristics) and Article 9 (products with sustainable investment as their objective) - the reality is that the vast majority of funds in the market sit within Article 6. This article explains what an SFDR Article 6 fund is, where they are typically established, how they differ from Articles 8 and 9 products, and how SFDR interacts with non-EU fund structures - a question of particular significance for managers domiciling funds in offshore jurisdictions such as the Cayman Islands, the British Virgin Islands and Bermuda. An SFDR Article 6 fund is a financial product that does not promote environmental or social characteristics (Article 8) and does not have sustainable investment as its objective (Article 9). In practical terms, Article 6 is the default classification: any fund that does not make specific ESG commitments in its investment process falls within this category. Article 6 does not mean a fund ignores sustainability risks entirely. Under Article 6(1) of the SFDR, managers of Article 6 products must still disclose the manner in which sustainability risks are integrated into their investment decisions, or explain why sustainability risks are not considered relevant. This is a disclosure obligation, not an investment mandate — the fund is not required to adopt any ESG strategy, but it must be transparent about its approach. Article 6 funds must also comply with pre-contractual disclosure requirements under Article 6(2), including a statement in offering documents on whether and how the product considers principal adverse impacts (PAIs) on sustainability factors. Where PAIs are not considered, an explanation must be provided. A common misconception is that Article 6 funds are "non-ESG" or sit outside the SFDR framework. This is incorrect. Every financial product offered by an EU-regulated financial market participant falls within the scope of the SFDR and must be classified. Article 6 is simply the baseline category for products that do not make affirmative ESG commitments beyond the minimum disclosure requirements. Article 6 funds are established across a wide range of jurisdictions, both within and outside the EU. The SFDR classification itself does not dictate where a fund must be domiciled - it is a disclosure regime that applies to the manager (or, more precisely, to the financial market participant making the product available), not to the fund vehicle itself. Within the EU, Article 6 funds are commonly structured in Luxembourg, the largest European fund domicile. Luxembourg offers well-established regulatory frameworks and is home to the majority of UCITS and EU-regulated alternative investment funds. Many managers without an ESG-specific strategy will establish their funds in Luxembourg and classify them as Article 6 funds by default. Outside the EU, a significant number of funds that are classified as Article 6 — or that would be classified as such if marketed into the EU — are domiciled in offshore jurisdictions. The Cayman Islands remains the dominant global fund domicile for alternative investment funds, particularly hedge funds, private equity vehicles and venture capital structures. The British Virgin Islands and Bermuda are also well-established fund jurisdictions. These offshore fund structures do not fall directly within the scope of the SFDR, but SFDR classification becomes relevant when the fund is marketed to EU investors by an EU-regulated manager or distributor, or where a non-EU manager delegates to or is managed by an EU-regulat...

June 10, 2026

AIFMD explained: scope, thresholds, exemptions and compliance

The Alternative Investment Fund Managers Directive (AIFMD) is the cornerstone of EU regulation for managers of non-UCITS investment funds. It determines which fund managers require authorisation, sets asset thresholds that trigger full regulatory obligations, and establishes the framework for marketing alternative investment funds to EU investors. It also created a passport allowing AIFMs to market their funds throughout the EEA without relying on National Private Placement Rules (NPPRs). This note sets out the scope of AIFMD, the key thresholds and exemptions available, how the directive applies to EU and non-EU managers, as well as recent changes introduced by AIFMD II. The Alternative Investment Fund Managers Directive (Directive 2011/61/EU), commonly known as AIFMD, is the primary EU regulatory framework governing managers of alternative investment funds (AIFs). It was adopted in 2011 and transposed into national law across EU member states by July 2013. AIFMD was subsequently amended by Directive (EU) 2024/927 (AIFMD II), which had to be transposed by member states by 16 April 2026. AIFMD regulates alternative investment fund managers (AIFMs), not the funds themselves. Its core objectives are: Investor protection through enhanced transparency and disclosure requirements Systemic risk monitoring across the alternative investment fund sector A harmonised regulatory and supervisory framework for AIFMs operating across the EU An AIF is defined broadly as any collective investment undertaking that raises capital from a number of investors with a view to investing it in accordance with a defined investment policy for the benefit of those investors, and which is not a UCITS fund. This definition captures hedge funds, private equity funds, real estate funds, infrastructure funds, fund of funds and other non-UCITS structures. AIFMD applies to any entity that manages one or more AIFs, regardless of the legal form of those funds or whether they are open-ended or closed-ended. The directive captures both EU AIFMs and, in certain circumstances, non-EU AIFMs. Funds within scope Private equity and venture capital funds (including carried interest and co-investment vehicles) Hedge funds (including single-strategy and multi-strategy vehicles) Real estate, infrastructure and debt funds Fund of funds structures Any other collective investment scheme that does not require authorisation under the UCITS Directive Key regulated activities Portfolio management and risk management (these are the minimum functions that define an AIFM) Marketing of AIF units or shares to investors in the EU Administration, valuation and ancillary services (where performed by the AIFM) Delegation arrangements (the AIFM remains responsible even where functions are delegated to third parties) Structures outside scope Certain structures are expressly excluded from AIFMD, including holding companies, institutions for occupational retirement provision (IORPs), supranational institutions (such as the EIB and EBRD), central banks, national governments and bodies managing social security and pension funds, employee participation or savings schemes, securitisation special purpose entities, and single-investor vehicles where the investor itself has management control. AIFMD provides a registration regime for smaller EU-AIFMs that fall below certain asset thresholds. These sub-threshold AIFMs are exempt from the full scope of AIFMD but remain subject to registration and reporting obligations with their home member state regulator. De minimis thresholds (Article 3) EUR 100 million: applies where the AIFs managed include funds that employ leverage. This threshold is calculated on the total value of assets under management (AuM), including any assets acquired through leverage. EUR 500 million: applies where the AIFs managed are unleveraged and have no redemption rights exercisable during a period of five years from the date of initial investment. EU AIFMs that fall below these...

Episode thumbnail for Cayman Islands investment funds and hedge funds explained
What are Cayman Islands investment funds?
Key features of Cayman Islands funds
Benefits of investing in Cayman Islands funds
How to set up a fund in the Cayman Islands
How Cayman Islands funds compare to other fund jurisdictions
Role of CIMA in regulating Cayman Islands mutual funds
Typical US manager use cases and common master-feeder structures
How Harneys can help

June 8, 2026

Cayman Islands investment funds and hedge funds explained What are Cayman Islands investment funds? Key features of Cayman Islands funds Benefits of investing in Cayman Islands funds How to set up a fund in the Cayman Islands How Cayman Islands funds compare to other fund jurisdictions Role of CIMA in regulating Cayman Islands mutual funds Typical US manager use cases and common master-feeder structures How Harneys can help

The Cayman Islands is the world's leading domicile for hedge funds and alternative investment vehicles. Its combination of regulatory pragmatism, tax neutrality, legal certainty and deep service-provider infrastructure makes it the jurisdiction of choice for managers launching funds that accept institutional and sophisticated investor capital. This guide explains the principal fund structures available, their key features, the formation process, the role of the Cayman Islands Monetary Authority (CIMA), and how Cayman compares with competing jurisdictions. A Cayman Islands investment fund is a collective investment scheme organised under Cayman law to pool capital from investors and deploy it in accordance with a defined investment strategy. The legislative framework draws primarily on the Mutual Funds Act (as revised) and the Private Funds Act (as revised), which together regulate the two broad categories of fund: 1. Mutual funds – open-ended vehicles that issue redeemable interests and are regulated under the Mutual Funds Act. 2. Private funds – closed-ended vehicles that issue non-redeemable interests and are regulated under the Private Funds Act. Common legal structures include the exempted limited partnership (the dominant private fund vehicle), the exempted company, the segregated portfolio company (SPC) and the unit trust. The choice of structure depends on factors such as investor base, strategy and liability ring-fencing requirements. Cayman hedge funds share a set of characteristics that have driven the jurisdiction's dominance: Tax neutrality – No income tax, capital gains tax, withholding tax or corporate tax is levied at the fund level, ensuring a single layer of taxation at the investor's home jurisdiction. Flexible investment mandates – Funds may invest across asset classes, including equities, credit, digital assets, derivatives and real assets, with no statutory restrictions on strategy. Investor familiarity – Institutional allocators, pension funds, endowments and sovereign wealth funds routinely accept Cayman fund documentation as market standard. Deep service-provider ecosystem – A mature network of administrators, custodians, auditors, prime brokers, directors and legal counsel supports the full fund lifecycle. Robust legal framework – English common law underpins the Cayman legal system, providing predictable contract enforcement, experienced courts and a well-developed body of fund-related case law. The jurisdiction delivers a combination of commercial and structural advantages that benefit both managers and investors: Speed to market – A standard Cayman fund can be launched in two to three months, where documentation is in agreed form and service providers are engaged. No exchange controls – Capital moves freely into and out of the jurisdiction without restriction, supporting global multi-currency strategies. Regulatory proportionality – CIMA applies risk-based supervision tailored to fund type and investor sophistication, avoiding the prescriptive operational requirements seen in onshore regimes. Global recognition – Cayman fund vehicles are widely accepted by US, European and Asian counterparties and satisfy the due diligence requirements of major institutional gatekeepers. Liability segregation options – SPCs allow managers to ring-fence assets and liabilities of individual strategies within a single legal entity, reducing cost and complexity for multi-strategy platforms. The formation process is well-established and follows a predictable sequence: Structuring and strategy definition – The manager works with Cayman counsel to select the appropriate vehicle (exempted limited partnership, exempted company or SPC), agree on governance arrangements and confirm the regulatory classification (mutual fund or private fund). Service-provider engagement – The fund appoints an administrator, an auditor (where required), a custodian/prime broker (where required), and independent directors (where required). Doc...

64 total episodes available

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What is Exploring the Funds Hub?: Exploring the Funds Hub is a captivating podcast series containing audio of written content that dives deep into the intriguing world of offshore funds, including the BVI and Cayman. Each episode sails through complex waters, bringing you up-to-date analysis and expert commentary from the leading minds in this specialised field.

Our episodes demystify legal jargon and break down complex terminology to make them accessible to all.

Harneys, an international law firm with entrepreneurial thinking, brings each episode to you.
How often does this podcast release new episodes?: This podcast updates weekly.
Where can I listen to this podcast?: This podcast is available on 6 platforms including Apple Podcasts, Spotify, and more. You can also use the RSS feed directly.
Does this podcast accept guests?: Information about guest appearances is not available.

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