Knowledge

Guernsey is, for many, the jurisdiction of choice for the establishment of investment funds and other investment structures across a wide range of asset classes. Guernsey is highly regarded for the quality of its regulatory regime and the competence and flexibility of its service providers. Investment funds activity forms a significant part of Guernsey's finance industry, and many innovative products and structures are available to suit different types of investors and promoters.

Research published by the Guernsey Financial Services Commission (the ''GFSC'') highlights that Guernsey-related investment businesses now manage or administer more than £1 trillion in assets globally.

As a third country for EU law purposes, funds and managers established in Guernsey sit outside the full scope of requirements under the Alternative Investment Fund Managers regime, while at the same time benefiting from the national private placement regime in many EU member states.

Private Investment Funds ("PIFs") have become one of Guernsey's most successful and widely used fund products. Originally introduced to provide a streamlined private fund regime for sophisticated investors, they are now used across a broad range of structures, from family investment vehicles and closely held funds to co-investment, continuation and institutional fund arrangements. Following issue by the GFSC of the Private Investment Fund Rules, 2025 (the "New PIF Rules"), the regime has been significantly enhanced through reduced regulatory requirements, while retaining appropriate safeguards through oversight by a GFSC licensed administrator (referred to as an "administrator" in this briefing).

Initiatives such as The Fund Foundry reflect Guernsey's continued commitment to innovation within the investment funds sector. Established as an industry-led incubation platform for emerging fund managers, it is designed to foster new talent, support entrepreneurial investment strategies and facilitate the development of the next generation of fund businesses. By bringing together expertise from across Guernsey's funds ecosystem, the initiative provides a collaborative environment in which managers can refine and launch innovative investment products, further reinforcing the Island's reputation as a forward-thinking and supportive centre for fund formation and growth.

Unregulated investment structures

Certain investment structures do not need to be regulated in Guernsey, broadly speaking where an investment structure comprises a single investor and/or a single asset. Unregulated structures remain a popular option, offering flexibility and cost efficiency where fund regulation is not required.  They are often used for co-invest structures alongside existing funds or for "deal-by-deal" structures, particularly by new sponsors building a track record.

PIFs

The PIF regime which was introduced in 2016 was updated in 2025 following the introduction of the New PIF Rules, streamlining the framework, removing legacy restrictions and calibrating regulation to a level appropriate to a fund for qualifying private investors.

PIFs are technically a sub-class of registered funds, so they will also receive their registration following a representation of suitability from the administrator. However, a separate set of rules apply to PIFs to the exclusion of the registered fund rules, making them effectively a distinct type of Guernsey fund.

PIFs were introduced by the GFSC as a simple and quick-to-market private Guernsey fund and are increasingly used in scalable and institutional contexts following the reforms brought by the New PIF Rules. Building on the success of the original regime, there are now two types of PIFs: Qualifying Private Investment Funds ("QPIFs") and Family Private Investment Funds ("Family PIFs"). The GFSC undertakes to register both types within one business day of its receipt of a complete application.

The key features of each type are as follows:

QPIFs

• open to the following types of investors only ("Qualifying Private Investors"):
• professional investors;
• experienced investors;
• knowledgeable employees;
• high net worth investors;
• UK professional investors;
• EU professional investors;
• US accredited investors; and
• licensee admitted investors;
• no limit to the number of investors holding an ultimate economic interest;
• no limit to the number of potential investors the PIF may be marketed to;
• no requirement to prepare a prospectus or any other disclosure documentation (but administrators must obtain a standard declaration form from all investors confirming their qualified status and understanding of risk);
• no requirement for a Guernsey licensed manager to be appointed (and where the structure does have a Guernsey manager, such manager benefits from the availability of a "PIF-only" investment management licence, with light-touch regulation); and
• no requirement to appoint external auditors.

 Family PIFs

• family PIFs are available to investors who share a "family relationship" or are an "eligible employee" of that family;
• such an "eligible employee" must meet the definition of a Qualifying Private Investor (see QPIFs);
• the PIF may not be marketed outside the family group; and
• for fiduciary firms wishing to act as the designated administrator of a Family PIF, the GFSC now offers a limited investment licence which is restricted solely to activities related to the administration of Family PIFs and prohibits other restricted investment activities.

Registered funds

Traditional registered funds offer a great deal of flexibility and are a very popular choice for funds of all sizes, open- and closed-ended, employing company or limited partnership structures. There are no restrictions on the type or number of investors that a registered fund may be marketed to, and the applicable rules are relatively light touch. There is no requirement for registered funds to appoint a Guernsey licensed manager, but a Guernsey licensed administrator and, in the case of registered open-ended funds, a Guernsey licensed custodian will need to be appointed.

One key requirement of the registered funds regime, which can make them less attractive in the case of smaller funds, is the requirement for each registered fund to produce an offering document which complies with the GFSC's prospectus rules. However, as this offering document may be made up of several documents, including the fund's constitutional and subscription documents, the burden of producing this offering document is often not as onerous as it may at first appear.

Sustainable funds

Guernsey Green Fund

Guernsey Green Fund designation provides investors with a trusted and transparent product, provided through compliance with the Guernsey Green Fund Rules, 2021, where a fund must ensure its portfolio meets the eligibility criteria where 75% of assets by value must meet the green criteria with the remainder invested more broadly, but must not lessen the overall objective of mitigating environmental damage and must not be invested in certain proscribed asset classes.

Natural Capital Fund

The Natural Capital Fund regime has a broader and more nature-focussed scope than the Guernsey Green Fund regime, whose focus is centred on climate change mitigation and adaptation. The Natural Capital Fund is provided through compliance with the Natural Capital Fund Rules, 2022. It was envisaged by the GFSC that through the introduction of the regime a wider spectrum of investment strategies may be accommodated, thereby increasing the range of schemes which might seek designation. 

Follow this link for details on Guernsey sustainable funds.

Types of fund vehicles used in Guernsey

Guernsey law permits fund vehicles to be structured using a variety of vehicles to suit the needs of the particular fund and its investors. The following vehicles are available in Guernsey:

• non-cellular companies, which are similar to, but in some ways more flexible than, traditional English companies limited by shares;
• protected cell companies ("PCCs"), which are a form of company that permits the establishment of separate protected cells, the assets and liabilities of which are segregated by statute from one another and from the company's core;
• incorporated cell companies ("ICCs"), which are similar to PCCs save that each incorporated cell of an ICC is a separately registered legal entity;
• limited partnerships, which are partnerships that are registered and must have a minimum of one general partner, responsible for its management and having unlimited liability, and any number of limited partners, whose limited liability is protected by statute; and
• unit trusts, which are a form of trust where underlying assets are held for the benefit of investors issued with "units" under the terms of a trust instrument.

Open-ended vs. closed-ended

Guernsey makes a fundamental distinction between open-ended funds and closed-ended funds.

An open-ended fund is one in which the investors are entitled under the terms of the scheme to have their investment redeemed or repurchased by the fund during the life of the fund at a price related to the value of the property to which they relate.

In a closed-ended fund, investors have no right to have their interests redeemed or repurchased during the life of the fund. The fund will, however, have a pre-determined term, at the end of which it is expected that its assets will be realised and the proceeds distributed to investors as part of its winding-up.

A closed-ended fund is not required to appoint a local custodian, whereas every Guernsey open-ended fund must appoint a Guernsey licensed custodian to hold its assets on trust.

Why set up a fund in Guernsey?

Guernsey is one of the world’s largest offshore finance centres, and the Island has developed into a leading jurisdiction for the establishment of investment funds.

The growth of the investment funds industry in Guernsey is attributable in part to the policies of the Guernsey authorities and the high quality of services available in Guernsey in relation to fund management, administration and custody.

The close relationship between the GFSC and Guernsey's funds industry ensures a high level of responsiveness. In approving a Guernsey fund, the GFSC is also willing to take a practical approach in determining the suitability of prospective managers.

As one of the most established, transparent and well-regulated offshore jurisdictions, Guernsey:

• is a member of the OECD and was placed on the G20 whitelist of offshore jurisdictions in 2009;
• has obtained designated territory status under the UK Financial Services and Markets Act, 2000; and
• has been assessed as being amongst the best quality financial centres in the world when measured against the rigorous international standards for tackling money laundering and terrorist financing set by the FATF.

Guernsey's low tax status, proximity to the financial markets of Europe (continuing to benefit from national private placement regimes), sophisticated banking and professional infrastructure, and a simplistic and efficient regime with an innovative and pragmatic regulator have contributed to Guernsey's success as a base for investment funds.

This ecosystem continues to be strengthened by initiatives such as The Fund Foundry, which provides financial and mentoring support to emerging managers establishing funds in Guernsey. It is a programme supported by Guernsey Finance and welcomed by the GFSC that brings together Guernsey's funds industry, a consortium of specialist service providers, banking partners, and fund managers. Anyone interested in learning more is encouraged to visit their website here.