A hedge fund depends mostly on who is going to be investing in the fund. With a domestic partnership legal structure of a hedge fund, when someone buys into the fund, they become a partner in a limited partnership. This kind is used when managing assets of people located within the US borders. With this legal structure, the hedge fund manager will usually create another entity for advisory purposes for the partnership. This is often times used as way to keep personal liabilities to a minimum. The entity once created will serve as a general partner to the partnership. Sometimes the manager of the hedge fund will create two entities, with one tasked as being the management company. The other one is tasked with being the general partner.
Another legal structure of a hedge fund is an offshore fund. This structure is for maintaining a person's assets when they are located outside the US borders. This fund is often times setup as a corporation and is put together so that it is located within one of the world's many tax havens, places like the Virgin Islands, Ireland, Bermuda, and the Cayman Islands. Where exactly the fund will be located depends entirely on where the investors are located themselves. Many times the hedge fund manager will create a corporate business unit for advisory purposes for the offshore hedge fund. This corporate unit will be an investment manager for the fund.
Another legal structure of a hedge fund is what is called a master feeder system. It is also sometimes called a "hub and spoke." The way this legal structure works is it lets those investors who live outside the US borders and those living within the States be able to put their money into an offshore fund that is one and the same. The US investors put their money into a limited partnership that is found within the US, which is considered a domestic feeder. People outside the US put their money into an offshore company, which is an offshore feeder. Both of these can be "fed" into the master account.
And the final legal structure of a hedge fund is what is known as a side by side structure. With this type of legal structure, the US investors will invest their money in a limited partnership. This partnership is organized inside of the US. Investors outside of the US borders will invest their money into an offshore corporation. There is a main adviser who allocates trade tickets going to and from the offshore fund and the domestic fund.
