Offshore Funds

Offshore funds are collective investment funds based overseas. From the UK investor's perspective, they fall into two categories.

FSA Recognised Funds : These are funds, which although managed overseas, are permitted to market themselves directly to U.K. private investors. Having the 'FSA Recognised' tag simply means that the U.K. authorities acknowledge the regulatory regime in the overseas territory is of a standard at least as 'good' as in the U.K. The authorities in the U.K. 'like the look' of regulation in Jersey, Guernsey, Isle of Man and Bermuda, so funds from these places are likely to be 'recognised' while some collective investment funds, known as UCITS are recognised.

There may however still be higher risk funds which the FSA don't recognise even though they're based in territories with 'good' regulatory regimes.

Even if a fund is 'FSA Recognised', in most cases U.K. investors would not be able to call on the Financial Services Compensation Scheme were the investment manager to collapse.

Regulated: This is where an offshore fund is regulated in the local jurisdiction. Such funds cannot be marketed directly to U.K. private investors, but if you want to invest in one, contact a stockbroker or Independent Financial Adviser (IFA) , who can organise the purchase for you.

These funds may be more risky than the 'FSA Recognised' variety.

See Also: Stockmarket Centre

Last Updated: May 2007 © Moneyextra.com

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