An Onshore Fund is an investment fund registered and domiciled in the United States (typically in Delaware or Massachusetts), regulated under U.S. securities laws, serving U.S. taxable investors and operating under U.S. regulatory framework.
What Is an Onshore Fund?
An Onshore Fund is a U.S.-domiciled investment fund, typically a Limited Partnership formed under Delaware or Massachusetts law, regulated by the SEC, states' securities administrators, and subject to U.S. federal and state tax laws. Onshore funds are structured specifically to serve U.S. taxable investors, including high-net-worth individuals and certain U.S. institutions. They comply with U.S. securities regulations, provide U.S. tax documentation (K-1s for investors), and operate under U.S. regulatory oversight.
How Do Onshore Funds Work?
Onshore funds are formed as Limited Partnerships under U.S. state law. A General Partner (the fund manager) manages investments; Limited Partners (investors) provide capital. The fund registers with the SEC as a hedge fund or private fund advisor, maintains compliance with U.S. securities laws, and files required regulatory documentation. Investor tax documentation is provided via K-1 forms showing each investor's allocable share of income, gains, and losses. Onshore funds typically provide more limited use of derivatives and leverage compared to offshore structures.
Why Do U.S. Taxable Investors Use Onshore Funds?
Onshore funds provide regulatory clarity familiar to U.S. investors, simplified tax reporting (K-1 documentation), and operations under U.S. regulatory framework. For U.S. taxable investors, onshore structures may offer better tax integration with their other U.S. investment holdings. However, onshore funds generally face more regulatory restrictions on strategies and operations.
Example: Onshore Fund in Practice
A family office with substantial U.S. tax-liable wealth invests in a Delaware-domiciled onshore hedge fund managed by a discretionary trader. The fund invests in U.S. and international equities using long/short strategies. The family office receives annual K-1 documentation showing its allocable portion of the fund's gains and losses, which integrate into the family's overall U.S. tax returns. Because both the fund and family office are U.S.-based, the structure provides tax-integrated reporting and regulatory simplicity compared to investing through an offshore fund.
When Should You Establish an Onshore Fund?
Onshore funds are appropriate for:
Managers whose primary investor base is U.S. taxable individuals
Situations where regulatory clarity under U.S. law is preferred
Family offices and high-net-worth individuals requiring U.S. tax integration
When operating a standalone fund rather than through a platform structure
Tell us your strategy and our 5-minute form gets you moving. We handle the setup, legal, and onboarding. You get a launch plan tailored for you, and your fund can go live in as little as 4 weeks.
