More than 8,000 hedge funds are registered by the Cayman Islands Monetary Authority, an increase of more than 2,000 funds compared to the be...

More than 8,000 hedge funds are registered by the Cayman Islands Monetary Authority, an increase of more than 2,000 funds compared to the beginning of 2005. More than 1,000 new hedge funds were authorised in the first half of 2006 alone, which is a record for any six-month reporting period in the Cayman Islands. According to new analysis by global offshore law firm Walkers, this surge is the result of a range of factors, including non-traditional applications of hedge funds and increased interest in emerging markets. "Walkers predicts continued growth for the hedge fund industry. Investment fund managers will continue to find ways to use these vehicles, and the recent pension law reforms and the judicial ruling in relation to the SEC investment advisor registration issued will only increase demand," Mark Lewis, a senior investment funds partner for Walkers, told WealthBriefing. "Regulation will continue to be an important part of the hedge fund environment, but we see this as a safeguard for the investment funds industry and not an obstacle to further growth." According to Hedge Fund Research, the hedge fund industry attracted $42.1 billion in new money in the second quarter of 2006 alone, bringing total industry assets under management to $1.225 trillion. This influx is the biggest quarterly jump in new funds since HFR started tracking in 2003. In addition to the increase in global strategies being employed, the demographic of the investors who are attracted to the hedge funds is also becoming more global with investment managers and financial institutions less dependent on investors from the United States and European Union countries. "We continue to see strong hedge fund interest globally from investors in Asia and the Middle East, as well as US and UK institutions,” Jonathan Tonge, investment funds group managing partner for Walkers, said. "The number of hedge funds being terminated has also risen, but with a steady increase in new hedge fund registrations, the termination to new fund registration ratio remains at a 1:3.”