The status quo for hedge funds to domicile offshore particularly in the Cayman Islands, the British Virgin Islands or Bermuda, but to be adm...

The status quo for hedge funds to domicile offshore particularly in the Cayman Islands, the British Virgin Islands or Bermuda, but to be administered in Dublin and listed on the Irish Stock Exchange is being challenged by the emergence of Luxembourg as a hedge fund centre. Luxembourg's decision in July 2004 to allow offshore hedge funds to list has enabled it to attract offshore funds and to compete on a level basis with Dublin, particularly for funds targeting the continental European market. In a recent analysis of hedge fund domicile and listing by Crédit Agricole-Caisse d’Epargne Investor Services, a major advantage for Luxembourg is that offshore fund promoters often choose their administrator and service providers in the country where they have their listing for the sake of convenience. Dublin and Luxembourg are unlikely to target the same customers, though, as asset managers from English-speaking countries, notably the US, will prefer to go through Dublin according to CACEIS. Luxembourg, meanwhile, is more likely to benefit from growing demand for hedge funds among investors in France, Germany and the Netherlands. The well-regulated environments of Luxembourg and Dublin also mean that both jurisdictions will experience continued demand from institutional investors who are subject to increasingly stringent compliance regimes. Alternative investment fund assets in Luxembourg reached $18.7 billion at the end of 2004.