A Segregated Portfolio Company is a single legal entity that houses multiple segregated portfolios, each with independently managed assets and liabilities protected by statutory law from one another.
What Is a Segregated Portfolio Company (SPC)?
A Segregated Portfolio Company (SPC) is a unique corporate structure, primarily offered in Cayman Islands and British Virgin Islands, that allows multiple investment portfolios to operate under one legal entity while maintaining complete legal and financial separation. Each segregated portfolio (SP) within the SPC functions as an independently managed investment vehicle with its own assets, liabilities, investors, and strategy, yet benefits from shared governance, compliance infrastructure, and service provider relationships at the parent company level. Unlike traditional structures requiring separate legal entities for each investment strategy, an SPC consolidates multiple portfolios under one regulated umbrella.
How Does an SPC Work?
An SPC operates through a statutory ring-fencing mechanism embedded in corporate law. When fund managers establish an SPC, they create a parent company that serves as the single legal entity. Within this structure, managers can create multiple segregated portfolios, each with its own share classes, investors, and investment mandates. The critical distinction is that assets and liabilities of each portfolio are legally segregated, meaning creditors or claimants against one portfolio cannot access the assets of another portfolio or the SPC's general assets. A single board of directors oversees all portfolios, ensuring compliance and governance standards are maintained uniformly, while each portfolio maintains its own distinct financial records, investor accounting, and performance tracking. This allows managers to launch new strategies, accommodate institutional investors with specific requirements, or test new investment approaches without establishing separate corporate entities or duplicating administrative infrastructure.
Why Is an SPC Important for Managers and Allocators?
For emerging fund managers, SPCs dramatically reduce operational complexity and costs by eliminating the need to establish multiple standalone funds. Institutional allocators benefit from the transparent ring-fencing, which provides superior legal protection compared to contractual segregation. SPCs also accelerate fund launches, new portfolios can be established in weeks rather than months, and provide allocators with confidence that operational and governance standards are institutional-grade. The structure enables managers to scale efficiently while maintaining compliance discipline across all portfolios.
Example: SPC in Practice
A systematic trading manager launches an SPC in Cayman Islands and creates three segregated portfolios: one for trend-following strategies (TrendSP), one for mean reversion strategies (RevenueSP), and one for customized institutional mandates (InstitutionalSP). Each portfolio operates independently with its own investor base, NAV calculations, and reporting. If the TrendSP experiences an operational issue or legal claim, the assets of RevenueSP and InstitutionalSP remain completely protected under statutory law. The manager benefits from shared compliance officers, a single fund administrator, unified IT infrastructure, and consolidated reporting, dramatically reducing operational overhead compared to managing three standalone funds.
When Should You Use an SPC?
SPCs are ideal for:
Emerging managers seeking to launch regulated funds with institutional-grade infrastructure quickly
Managers planning to operate multiple strategies or accommodate diverse investor mandates
Situations requiring statutory asset protection superior to contractual segregation
Scenarios where operational efficiency and cost reduction are critical for competitive fundraising
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