Dubai-based investors are increasingly using fund structures domiciled in the Cayman Islands, according to CI Volatility Investments.
The Cayman Islands Monetary Authority (CIMA)-registered investment firm said tax alignment, regulatory frameworks, and access to alternative strategies are driving the trend.
In an analysis published on 21 February, the firm noted that neither Dubai nor Cayman imposes income tax, capital gains tax or corporate tax on investment funds.
Meanwhile, the United Arab Emirates’ recently introduced corporate tax exempts qualifying investment funds, maintaining that alignment.
The firm pointed to the Cayman Islands’ position in global fund domiciliation, stating that over 60% of the world’s hedge funds are structured there.
CI Volatility Investments said this gives Dubai-based investors access to the same structures used by sovereign wealth funds, pension funds and endowments.
The analysis also cited currency alignment as a consideration, noting that most Cayman-domiciled funds operate in US dollars, which aligns with the UAE dirham’s dollar peg.
The analysis referenced market downturns in 2020 and 2022, claiming that volatility funds and macro strategies housed in Cayman structures delivered returns during those periods.
It suggested that Dubai investors who had allocated to such funds preserved and grew capital while other parts of their portfolios were under pressure.
CI Volatility Investments also pointed to CIMA as providing a regulatory framework that balances investor protection with operational flexibility.
The firm added that Cayman fund structures can simplify cross-border estate planning, which it described as relevant given the international makeup of Dubai’s investor base.
