An offshore fund is a collective investment scheme domiciled in an Offshore Financial Centre such as the British Virgin Islands, Luxembourg, or the Cayman Islands; it is typically sold exclusively to 'foreign' investors (those not of the domestic fund sponsor's country of origin). Thus, a common example could involve an offshore fund managed or sponsored by a U.S.-based money manager, organized under the laws of the Cayman Islands and sold exclusively to non-U.S. investors. For the purposes of the Income and Corporation Taxes Act 1988 of the UK, an offshore fund is one which is governed by the Offshore Fund Rules set out in that Act. The vast majority of offshore funds are organized under the laws of the Cayman Islands, with the British Virgin Islands being the second most popular domicile.
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