Since the enactment of the Mutual Funds Law in 1993 the Cayman Islands have grown into the world's leading domicile for mutual funds with 8,972 funds as at end of June 2007. At the end of 2002 the Cayman Islands hosted more than 50% of the world's hedge funds.
The mutual funds industry in the Cayman Islands is also attractive due to the high degree of professional service providers such as lawyers accountants and administrators. With the growth of its industry to being the top jurisdiction the Cayman Islands has attracted some of the world's best professionals to practice in the Cayman Islands which enables access to a significant wealth of expertise for mutual fund clients.The vast majority of mutual funds set up in the Cayman Islands are for institutional and sophisticated clients. Four types of funds are offered in the Cayman Islands under the Mutual Funds Law. The Law provides flexibility in the area of investment objectives and fund structure while mandating full transparency to investors via the fund's offering memorandum. This approach, combined with the licensing of mutual funds by the Cayman Islands Monetary Authority and the Authority's regulation of Mutual fund Administrators, provides an effective regulatory regime for the industry.In addition, the Cayman Islands policy is to only allow applicants with sound reputations and expertise to incorporate or administer mutual funds in the Cayman Islands.