Offshore Funds

Hannah Beecham  Thursday, Feb 4 2010  09.00

Offshore Fund Investor - Know Thyself!

With tens of thousands of offshore funds to choose between, many expats find this form of investment bewildering. My golden rule to investors is 'know thyself'. When selecting an offshore fund, put your unique needs first.

For example, rather than looking at the long list of funds and allowing yourself to be swayed by a well-known name, or a particularly dynamic piece of advertising, endeavour to match your individual investment profile to the fund. To do this you need to know what your attitude to risk is – all offshore funds carry an element of risk, even if the risk is said to be minimal. Are you

a) cautious?

b) Cautious with an element of adventure, ie balanced?

c) an adventurous type of investor?

How will you be spending the profits?

Next, you need to think about what you want from the money you hope to make. Is it to bolster your income, pay school fees or clear a mortgage?

Finally, if you need reassurance, and can afford the layout, take professional advice. A good independent financial adviser (IFA) will identify your responses to risk, select the type of fund best suited to your needs, calculate the fund's charges and fees over the course of your investment, and explain how and by which authority the fund is regulated. Offshore funds are registered and administered outside the UK. Those which are officially approved by the UK's financial regulatory body, the FSA, are known as 'recognised' offshore funds. You can check out a fund's status on the FSA's website at www.fsa.gov.uk.

Who's offering what?

Fidelity International, Skandia, and Friends Provident International have wide ranges of offshore funds. And all three offer what's known as 'best-of-breed' fund management services. This is a practice which hires the expertise of top freelance managers who guarantee continuity of management excellence in the event of a fund company's manager resigning. Whilst window shopping, check out Skandia's Global Best Ideas fund which hand-picked 10 'world-class' fund mangers tasking them to choose their 10 best stock ideas which are all wrapped up within the one fund.

Lloyds Offshore Funds, Barclays and HSBC Bank International, also, have a long track record in offshore fund management. Most recently, HSBC has launched a suite of European Exchange Traded Funds. An ETF is a type of fund increasingly viewed by investors as being simpler to understand as well as offering risk-controlled flexibility. So there's your first question to an IFA. 'Tell me more about ETFs.'

Get a rating

Investors can check out the performance and pedigree of offshore funds with the independent fund management rating agency, Morningstar, at www.funds.morningstar.com.