An investment fund is not a relevant entity for the purpose of the economic substance law and is not required to satisfy the economic substance test.

The economic substance law defines an “investment fund” as an entity whose principal business is the issuing of investment interests to raise funds or pool investor funds with the aim of enabling a holder of such an investment interest to benefit from the profits or gains from the entity's acquisition, holding, management or disposal of investments and includes any entity through which an investment fund directly or indirectly invests or operates (but not an entity that is itself the ultimate investment held), but does not include a person licensed under the Banks and Trust Companies Law (2018 Revision) or the Insurance Law, 2010, or a person registered under the Building Societies Law (2014 Revision) or the Friendly Societies Law (1998 Revision).

“Investment fund business” is defined as the business of operating as an investment fund.

“Investment interests” means a share, trust unit, partnership interest or other right that carries an entitlement to participate in the profits or gains of the entity.

The Cayman authority will regard mutual funds licensed or registered with the Cayman Islands Monetary Authority as investment funds.