www.InvestmentGuide.co.uk
www.InvestmentGuide.co.uk Other types of Offshore
Funds
Investment Trusts
Unit Trusts
How Best to Invest in Stocks and Shares
OFFSHORE OEIC
You invest in units or shares which closely reflect the value of the shares or other assets held within the fund. Offshore funds are managed by professionals and although with many you are buying shares in a company, they work in a similar way to unit trusts or OEIC but are partially outside the control of the UK authorities. They are usually based in places like Jersey, Guernsey, Isle of Man, Bermuda, Luxembourg, the Cayman Islands or Dublin. Investment is often provided from London.
Who can invest Anyone.
How worthwhile High charges tend to make them poor value . For fixed interest funds see Offshore Stock and Bond Fund. Consider instead Exchange Traded Funds (iShares).
Minimum £100 to £5,000 or more. Some are denominated in foreign currencies, ie US $ or € or Swiss Francs.
Maximum None.
Suitable Lump sums.
Money back Usually in a few days at the market price. You can usually buy and sell by phone.
Interest Variable. Called dividend or distribution. Some funds don't pay interest. You hope to make a capital gain by selling for more than you buy; you may lose money.
Interest paid Often half-yearly by cheque to you or accumulated.
Tax Not deducted although some of the underlying shares may have had a withholding tax deducted from the income. If you are a UK resident and a taxpayer you are liable to pay tax on the income. Basic taxpayers pay 20% tax; higher rate taxpayers pay 40%. If the fund invests wholly in UK shares, the dividends have tax deducted at source and your income tax position is exactly the same as with a UK authorised unit trust or OEIC. If the fund accumulates more than 15% of its income UK residents are liable to income tax instead of capital gains tax on any gain you make when you dispose of your units or shares, or if you make a gain when you switch to another sub-fund in an umbrella fund. Disposals and switches may be liable to capital gains tax for UK residents.
Fees to pay Initial charge: Up to 6%. Yearly charge around 1% to 1½% deducted from your income.
Passbook None. Share certificate issued.
Children Unsuitable.
Risk High. The price of units fluctuates down as well as up. There is a chance that the managers will run off with your money but not if the fund is recognised in a territory with a compensation scheme. The assets are sometimes held by a custodian which acts rather like a UK unit trust trustee although in offshore centres the custodian is usually part of the same group of companies which manages the fund.
How to invest Phone the managers of the fund you are interested in, ask for a prospectus and read it carefully. You should be able to place your order by phone. Sales are also best made by phone so you know what price you get.
Where from Money Management and other magazines list funds and performance. See the Financial Times Offshore Funds page for prices, yields and recognised funds.
Other types of Offshore
Funds
Recognised Offshore Fund Management
Companies
Investment Trusts
Unit Trusts
Contents
Get the whole site
by E Mail or on Disc
Last updated 1 June 2001