The Cayman Islands remains the dominant domicile for emerging hedge funds, with more than half of managers choosing the jurisdiction for their flagship fund, according to the latest Emerging Manager Survey published by the Alternative Investment Management Association (AIMA) and Marex.
The biennial survey, which gathered responses from 180 emerging hedge fund managers and 50 institutional investors, found that 56% of respondents were domiciled in the Cayman Islands, compared with 55% in 2024 and 54% in 2022. The US remained the second most popular jurisdiction, accounting for 16% of flagship fund domiciles, while Ireland and Luxembourg recorded modest increases in market share.
Together, the Cayman Islands and the US continue to account for 72% of flagship fund domiciles among respondents, indicating that managers continue to favour established fund jurisdictions despite growing interest in European structures.
The report notes that Ireland’s share of fund domiciles increased from 3% to 6% since the previous survey, while Luxembourg rose from 2% to 3%. The authors suggest the trend may reflect demand for EU-regulated fund vehicles from certain institutional investors rather than a broader shift away from offshore structures.
Beyond domicile preferences, the survey points to continued institutionalisation across the emerging hedge fund sector. Average assets under management among participating firms increased to $233.7 million, while managers reported expanding headcounts and greater investment in governance, technology and operational infrastructure.
The fundraising environment also appears to have improved. According to the survey, the proportion of managers taking more than five years to exceed $100 million in assets under management fell to 28% from 56% in the previous survey, suggesting newer firms are scaling more rapidly.
Institutional investors also indicated a greater willingness to allocate capital earlier in a manager’s lifecycle. The average minimum track record required before investing declined to 1.27 years from 1.52 years in 2024, with 58% of respondents now prepared to consider managers with a track record of one year or less.
In terms of investment strategies, long/short equity remained the largest segment of the emerging manager universe, representing 36% of respondents. It was also the strategy most widely favoured by investors, attracting 54% of allocations. Multi-strategy and global macro completed the three most common approaches.
Fee levels were broadly stable despite continued competition for investor capital. Average management fees edged up slightly to 1.43%, while average performance fees remained largely unchanged at 16.24%. Rather than competing primarily on pricing, the survey found that managers are increasingly differentiating themselves through enhanced investor protections, including the use of hurdle rates and high-water marks.
Commenting on the findings, Samantha Widmer, director for funds and capital markets at Cayman Finance, said the results demonstrate that the Cayman Islands continues to play a central role in the emerging hedge fund sector, even as managers broaden their product offerings through onshore vehicles and managed accounts to meet evolving investor demand.
