The 2025 Fundamentals: Navigating New Heights white paper released by Walkers highlights the strength and adaptability of Cayman’s funds sector, despite global market volatility and slower capital raising across asset classes.
In the private markets, deal activity in the first half of 2025 was 40% higher in valuation terms than the first half of 2024. However, private investment activity has fallen in the second half of 2025 compared with the first six months.
Private credit’s rise continues to define the post-pandemic investment cycle, with 25% of all new funds pursuing debt-focused strategies. The report notes growing demand for bespoke lending and structured credit solutions as traditional lenders remain cautious. Technology-focused funds also hit a five-year high, driven by artificial intelligence and blockchain adoption, both as investment themes and operational tools.
Walkers’ data, drawn from funds established for clients in 2025, shows that the Cayman Islands continues to attract both established and emerging managers. Nearly one-third of new private funds target between US$1 billion and US$3 billion in assets, while smaller funds under US$500 million, often focused on specialised niche sectors, remain active.
“The challenges of 2025 have tested the sector but also clarified its priorities: resilience, innovation and long-term value,” the report states, noting that sponsors are diversifying capital sources through insurance-linked structures and rated note vehicles. These approaches have deepened the link between the insurance and asset management industries, with managers increasingly viewing insurers as both investors and partners.
Liquidity management remains a central theme. The share of funds using lock-ups increased to 45%, though the duration of those restrictions has shortened. Almost all cryptocurrency funds now employ redemption gates, reflecting heightened caution amid market volatility.
The white paper points to record inflows into the secondary market, which raised more than US$80 billion globally in the first half of 2025. Based on Walkers’ own data, 20% of Cayman Islands private funds launched in 2025 were targeting secondary investments.
The focus on flexible liquidity solutions has also led to significant interplay between secondaries and evergreen funds, with the obligations of evergreen funds to generate periodic liquidity aligning well with the liquidity generated by secondary transactions, the white paper noted.
Meanwhile, governance standards have strengthened. Eighty-five percent of funds now appoint independent directors, reversing a multiyear decline. Virtually every Cayman fund launched from London includes independent board members, while usage remains lower in Asia.
“The Cayman Islands will remain popular among managers and investors alike due to its commitment to stable governance, regulatory consistency and a world-class service offering,” the report said.
