This article is a continuation of our series exploring how leading fund jurisdictions are adapting to meet the evolving needs of clients - whether driven by market developments, investor demands, or structural changes in wealth management. Each insight will spotlight a different domicile, examining how its regulatory frameworks, fund structures, and investment flexibility can help address the challenges facing family offices and sophisticated investors. We began with Malta and its Notified Professional Investor Fund (NPIF) regime and followed up with Luxembourg and its Reserved Alternative Investment Fund (RAIF), Registered Special Limited Partnership (SCSp), Société de Participations Financières (SOPARFI), as well as the Société de Gestion de Patrimoine Familial (SPF).
We moved on to the Cayman Islands and the Segregated Portfolio Company (SPC), and now touch on Limited Partnerships (LPs) and Limited Liability Companies (LLCs) in the United States of America.
The United States remains one of the most sophisticated and investor-friendly jurisdictions for private fund formation. With a wide range of structuring options and lighter regulation than most institutional domiciles, it offers an ideal environment for emerging managers, family offices, and private investors seeking efficient, lightly regulated vehicles tailored to their strategic goals.
Private Funds: Streamlined and Strategic
Most U.S.-domiciled private funds, including hedge funds, venture capital funds, private equity funds, real estate funds, private credit funds and digital asset funds, as well as private investment vehicles operate as private funds, exempt from registration under the Investment Company Act of 1940. These funds typically rely on exemptions such as Section 3(c)(1) or 3(c)(7), which limit the number or type of investors but allow for significant flexibility in fund design and operations.
This regulatory approach enables managers to focus on performance and strategy, while minimizing the administrative and compliance burdens associated with fully registered vehicles.
LPs and LLCs: Proven Structures for U.S. Private Funds
Two of the most commonly used structures for U.S. private funds are Limited Partnerships (LPs) and Limited Liability Companies (LLCs)—usually formed under Delaware law due to its well-established legal precedent and business-friendly environment.
- Limited Partnerships (LPs): The traditional choice for hedge funds and private equity vehicles, LPs offer a clear delineation between the general partner (GP) and limited partners (LPs). They provide tax transparency and a governance model that aligns with institutional investor expectations. LPs are governed by a partnership agreement that defines the roles, responsibilities, and economic arrangements among the partners.
- Limited Liability Companies (LLCs): LLCs are typically structured as manager-managed entities and, when electing for partnership tax treatment, offer similar tax benefits to LPs. They are governed by an operating agreement that sets forth the management structure and economic terms.
While both structures are governed by formal agreements covering a range of items like fee arrangements, capital commitments, liquidity terms and investor rights, the extent to which they can be tailored depends on the specific fund strategy, investor requirements, and regulatory considerations.
When Lighter Regulation Makes Sense
These U.S. structures are especially well-suited for:
While the fund itself may be exempt from registration, fund managers should still assess whether federal or state-level investment adviser registration is required—or whether an exemption applies.
Both our U.S.-based professionals and extensive global team support clients in administering private funds that are efficient, compliant, and tailored to their investor base. Whether you're launching a new strategy, consolidating family wealth, or exploring a bespoke investment platform, we provide:
If you are interested in learning more, please reach out to Dan Smith, President of US Fund Services, or Ismail Ekmekci, Head of U.S. Private Equity Solutions.