By the first quarter of 2007, total hedge fund assets had hit $2.5 trillion, driven by buoyant manager performance and surging capital inflows. At the same time, the number of hedge funds had soared to almost 10,000, with new shops opening all the time to meet skyrocketing investor demand.

This paper will examine the growth of the offshore funds segment within the wider expansion of the hedge fund industry and assess the advantages that an offshore capability brings to managers. It will then discuss the key operational capabilities an offshore service requires for any fund interested in pursuing this pathway to growth.