Hedge Funds
Professional Investor Funds (“PIFs”)
Professional Investor Funds in Malta (PIFs) are a special class of collective investment schemes regulated in the Investment Services Act, 1994. These types of funds are the most commonly used in Malta due to a more flexible regulation in place. Maltese Hedge Funds are typically set up as Professional Investor Funds.
While always benefiting from a more lax regulation than UCITS funds, the level of regulation applicable to PIFs depend on the type of investors targeted; we can find three classes of investors:
Malta is considered to be an ideal fund domicile, not only due to the country’s advantageous system of taxation but also as a result of the high quality services offered by local service providers.
The advantages of Malta as a Fund domicile are the following:
While always benefiting from a more lax regulation than UCITS funds, the level of regulation applicable to PIFs depend on the type of investors targeted; we can find three classes of investors:
- PIFs promoted to Experienced Investors - minimum investment threshold of EUR 10,000 or equivalent in any other currency.
- PIFs promoted to Qualifying Investors - minimum investment threshold of EUR 75,000 or equivalent in any other currency; and
- PIFs promoted to Extraordinary Investors - minimum investment threshold of EUR 750,000 or equivalent in any other currency.
Malta is considered to be an ideal fund domicile, not only due to the country’s advantageous system of taxation but also as a result of the high quality services offered by local service providers.
The advantages of Malta as a Fund domicile are the following:
- The level of cost involved is lower than in other jurisdictions.
- Flexibility. The regulator, the MFSA, adopts a practical pro-business approach. The MFSA also operates as a “one stop shop” for all types of financial services, is approachable and provides a timely and efficient service.
- Custodians are only required when the fund is a UCITS fund or a PIF promoted to Experienced Investors. In any other case,
- A large number of internationally renowned service providers, administrators, managers, banks, custodians are present on the island.
- Favourable tax regime.
- Skilled, English speaking population.
- Perfect climate.
Alternative Investment Funds (AIF)
The term “Alternative Investment Funds (AIF)” as provided by the AIFMD refers to collective investment undertakings, which raise capital from a number of investors with a view to investing it in accordance with a defined investment strategy for the benefit of those investors. AIFs are therefore those type of funds which do not qualify as UCITS. Typically, AIFs refer to Hedge funds, real estate and infrastructure funds, private equity funds etc.
Professional Investor Funds (PIFs) - which are the most common types of funds set up in Malta - which are managed by an Alternative Investment Fund Manager (AIFM) must also be converted into an AIF. Similarly, PIFs which are self managed but have an AUM exceeding 100m (if assets include those acquired through the use of leverage) must also convert to AIFs.
In return for greater regulation, unlike PIFs AIFs benefit from the ability to passport in any European country and unlike PIFs can be marketed in any European country in which the passport procedure was followed.
The Malta Financial Services Authority (MFSA) licences collective investment schemes set up as AIFs. NM Corporate Services offer a comprehensive and tailored service in the establishment of funds in Malta and is able to assist in the preparation of documentation required to make an application to the MFSA and also to represent applicants on the application with the MFSA until the licence is issued.
For more information about Hedge Funds, Professional Investor Funds (“PIFs”), and Alternative Investment Funds (AIF) please contact us on info@virtusmalta.com or via the form on the Contact Us page.
Professional Investor Funds (PIFs) - which are the most common types of funds set up in Malta - which are managed by an Alternative Investment Fund Manager (AIFM) must also be converted into an AIF. Similarly, PIFs which are self managed but have an AUM exceeding 100m (if assets include those acquired through the use of leverage) must also convert to AIFs.
In return for greater regulation, unlike PIFs AIFs benefit from the ability to passport in any European country and unlike PIFs can be marketed in any European country in which the passport procedure was followed.
The Malta Financial Services Authority (MFSA) licences collective investment schemes set up as AIFs. NM Corporate Services offer a comprehensive and tailored service in the establishment of funds in Malta and is able to assist in the preparation of documentation required to make an application to the MFSA and also to represent applicants on the application with the MFSA until the licence is issued.
For more information about Hedge Funds, Professional Investor Funds (“PIFs”), and Alternative Investment Funds (AIF) please contact us on info@virtusmalta.com or via the form on the Contact Us page.
