Investment Funds Overview

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As well as a commitment to quality service, we are aware of clients’ needs to control costs. To this end, our audit approach is designed to focus effort on areas with a higher risk of material misstatements and to leverage from clients’ internal controls in order to reduce detailed substantive procedures. As part of this process, we provide constructive feedback on internal controls and comment on other critical areas of your business. Our effort is directed to those areas that matter most, thereby providing a high quality audit within a competitive fee structure.

KPMG in Bermuda has over 400 investment and hedge fund clients, ranging in size from large funds with net assets of over $1 billion to small and startup funds with net assets of only a few million dollars. These investment fund entities include companies, limited partnerships and unit trusts formed under the laws of Bermuda, other offshore jurisdictions and some U.S. states.

Structures commonly used by our hedge fund clients include master/feeder funds with feeders for U.S. and non-U.S. investors, feeders denominated in various currencies, and feeders with different fee structures for different groups of target investors. Single entity funds, which are usually formed as a limited liability company, may elect to be treated as a partnership for U.S. tax purposes.

These companies usually have multiple classes or series of shares (or both) to distinguish between various types of investors, for example those that may participate in profits on “hot-issue” securities versus those who may not and to allow for equalization accounting.

We provide audit and U.S. tax services to hedge fund clients who typically target high net worth individuals and institutional investors as opposed to retail investors.

These funds use a broad range of investment strategies and invest in a wide array of securities and markets. Some of the strategies used include trading stocks long/short, convertible and risk arbitrage, modeling and momentum strategies, investing in distressed or high-yield debt, emerging market securities, country or regional markets, specific sectors or industries and other investment companies (fund of funds). Our hedge fund clients buy and sell a wide range of instruments from liquid securities such as marketable debt and equity securities, options, futures and forwards to less liquid instruments such as swaps, distressed debt, emerging market securities, restricted or thinly traded debt and equity securities and venture capital investments.

Because we have experience with different investment fund structures and a wide range of strategies and securities, our Investments & Banking Practice is well qualified to advise you on the structuring, regulatory, accounting and tax issues related to the formation, or ongoing operations of your offshore fund structure.

KPMG was one of the first accounting firms to provide specialized U.S. tax services in Bermuda. Our team of 20 tax advisors can consult on all aspects of U.S. tax as they apply to offshore investment fund entities. We also assist investment advisers and fund administrators with a wide range of tax advisory and compliance services.

The audit and tax professionals in KPMG Bermuda’s Investments & Banking Practice welcome the opportunity to assist you.

For more information, please contact Craig Bridgewater, or Theo Evangelakos