Bermuda investment funds: a practical guide

Bermuda is a well-established jurisdiction for investment funds, including structures used in the insurance and insurance-linked securities (ILS) and digital asset space, supported by a deep ecosystem of experienced professional service providers.

The regulatory framework offers flexibility and choice, with a range of fund classifications designed to accommodate different investor bases, strategies and distribution models. Funds may be established as companies, partnerships, unit trusts, LLCs, Segregated Accounts Companies (SACs) and Incorporated Segregated Accounts Companies (ISACs), enabling tailored structuring solutions from simple vehicles to complex platform arrangements.

The establishment and operation of both open-ended and closed-ended investment funds in Bermuda is governed principally by the Investment Funds Act 2006 (IFA) and related rules and regulations. The Bermuda Monetary Authority (BMA) is the principal regulator.

The regulatory framework (high level)

The establishment and operation of both open-ended and closed-ended investment funds in Bermuda is governed principally by the Investment Funds Act 2006 (IFA) and related rules and regulations. The Bermuda Monetary Authority (BMA) is the principal regulator.

Fund categories (registered vs authorised)

Bermuda funds must be either:

• Registered Funds; or
• Authorised Funds (subject to a higher level of regulatory oversight).

Registered Funds

There are four classes of registered fund:

Private Fund 

Typically used for seeding vehicles or closely held structures.

• Fewer than 20 investors and not offered to the public
• Can be open- or closed-ended

Professional Closed Fund 

Closed-ended and open only to qualified participants.

• Investor warning required
• Designate required for safekeeping of assets

Professional Class A Fund

Typically used for institutional or sophisticated investors.

• Open only to qualified participants
• Often used where the investment manager is regulated by a recognised foreign regulator or meets AUM thresholds

Professional Class B Fund

Also aimed at institutional/high-net-worth investors.

• Open only to qualified participants
• Additional regulatory oversight for changes to service providers and directors

Baseline requirements (all registered funds)

• AML/ATF compliance
• Fit and proper operators and service providers
• Financial statements prepared under IFRS or GAAP
• Appointment of a registrar maintaining a Bermuda register of participants

Authorised Funds

Funds that do not qualify for registration must be authorised. There are four classes:

Institutional Fund

• Minimum investment of US$100,000 or qualified participants only
• Investment manager, administrator, auditor, and custodian/prime broker required

Administered Fund

• Minimum investment of US$50,000 or listing on a recognised exchange
• Must appoint a BMA-licensed administrator
• Investment manager, auditor and custodian/prime broker required

Specified Jurisdiction Fund

• Typically used where the fund is established in or connected to an approved jurisdiction
• Subject to quarterly reporting and annual compliance

Standard Fund

• Retail-facing fund
• No minimum investment requirement
• Requires Bermuda-based administrator or custodian

Baseline requirements (all authorised funds)

• AML/ATF compliance
• Fit and proper operators and service providers
• Registrar appointment
• “Four eyes” principle (minimum two directors)
• Bermuda-based representative with access to books and records

Vehicles and structuring options

Investment funds may be structured in various forms, with mutual fund companies (including SACs) and limited partnerships most commonly used.

• Exempted company: Suitable for open- or closed-ended funds. Supports multiple share classes. 
• Limited partnership: Common for private funds. Flexible and familiar to sponsors. 
• Bermuda LLC: Based on the Delaware model. Flexible governance and capital structure. 
• Unit trusts: Efficient to establish. Less commonly used but suitable in certain contexts
• Segregated Accounts Company (SAC): SACs allow assets and liabilities to be segregated between portfolios within a single entity. Efficient platform for multi-strategy funds; supports umbrella and cell-based structures without multiple incorporations providing flexibility for different investor classes and strategies. 
• ISAC / ISA: ISACs provide similar benefits to SACs but with separate legal personality at the cell level. Each ISA is a distinct legal entity. Often used for platform and capital-efficient structuring. 

Continuing obligations (selected highlights)

Registrar

All Bermuda investment funds must appoint a Bermuda registrar to maintain the register of participants.

Valuations and NAV

Minimum NAV calculation frequency:

• Standard Funds: monthly
• Institutional / Administered / Specified Jurisdiction: quarterly
• Registered Funds: annually

Valuation methodology must be disclosed in the offering document and applied consistently.

Safekeeping of assets (closed-ended funds)

Professional closed funds and closed-ended private funds must appoint a designate responsible for safekeeping fund property, with details disclosed to investors.

Reporting and filings

All funds must comply with BMA reporting requirements.

Authorised Funds 

• Monthly (Standard Funds) or quarterly (Institutional / Administered / Specified Jurisdiction) statistical filings
• Annual statement of compliance within six months of financial year end

Registered Funds (annual filings)

• Class A: audited financials + certification + updated offering document
• Class B: audited financials + certification + material change statement
• Private Fund: audited or unaudited financials + certification
• Professional Closed Fund: audited financials + certification
• Material changes

Authorised Funds

The operator of an Authorised Fund must notify the BMA of certain proposals, including material changes to the offering document, replacement of service providers and specified governance changes (depending on the vehicle), reconstructions/amalgamations and wind-ups. Depending on fund classification and the type of change, prior BMA approval may be required, or prior notification may suffice. For Professional Class B funds, prior approval is required for changes to directors or key service providers (custodian, administrator, investment manager, registrar and auditor).Notification required for certain governance changes

Registered Funds

Professional Class B funds require prior approval for changes to directors and key service providers (custodian, administrator, investment manager, registrar and auditor). 

The manager overlay: Investment Business Act 2003

Fund regulation under the IFA is only one part of the analysis. Depending on the structure and where activities are carried on, the investment manager or adviser may need to consider whether it is conducting regulated investment business in or from Bermuda, requiring registration or licensing under the Investment Business Act 2003.

Carey Olsen: how we support sponsors

Carey Olsen advises sponsors, managers, investors and onshore counsel on the full lifecycle of Bermuda investment funds, from initial structuring and classification through to launch, ongoing compliance, restructurings and wind-down.
We work closely with onshore counsel to provide a clear and practical Bermuda regulatory overlay, including:

• advising on the most appropriate fund classification and structure;
• guiding the appointment and positioning of service providers;
• supporting the preparation and review of offering documents; and
• assisting with ongoing BMA engagement, including filings, notifications and regulatory queries.

We have particular experience advising on ILS structures, digital asset strategies and platform vehicles, and on navigating the interaction between the IFA, the Investment Business Act and other Bermuda regulatory regimes.

Where clients require a more integrated solution, we can coordinate with our affiliate, Carey Olsen Services Bermuda Limited, to incorporate or establish the investment fund vehicle and provide ongoing corporate administration, enabling a streamlined approach across legal, regulatory and operational workstreams.