The real reason hedge funds flock to the islands

The Cayman Islands are now home to 10,000 hedge funds and other investment vehicles. AllAboutAlpha notes there's one fund for every five residents. The conventional view, of course, is that hedge funds are drawn to such exotic locales because of lax regulatory requirements. But Douglas Cumming of Canada's York University and Sophia Johan of the Tilburg Law and Economic Centre in The Netherlands regressed regulatory characteristics against hedge fund strategies and concluded that there is "no support for the view that hedge fund managers pursuing riskier strategies or strategies with potentially more pronounced agency problems systematically select jurisdictions with less stringent regulations." Instead they select locales based on marketing considerations.  

For more:
- here's the AllAboutAlpha article

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