View more on these topics

The offshore Fof route

With the British weather so unpredictable, it is understandable that many advisers will be going offshore in the coming weeks for some well earned rest but, from an investment perspective, going offshore is often less appealing. The Cayman Islands might sound like a nice holiday destination but are you comfortable putting your clients’ money there?

Offshore does not necessarily mean far offshore. We are seeing a lot more funds based in Dublin, Guernsey and a short hop over to the continent but, for many, that is still a step too far. And understandably so.

For a start, just getting your head round the 2,500 or so UK-domiciled funds is time-consuming enough. Then there are those concerns about going beyond the security of the FSA regulatory regime. It requires time and expertise to research and understand the nature and extent of regulatory protection offered by these offshore authorities.

Getting information about many offshore funds can be hard as many of them are run by boutiques with small marketing teams and aimed primarily at institutional and sophisticated investors rather than retail investors.

Finally, there is the paperwork. The administrators of many offshore funds require a huge amounts of forms to be filled in and declarations to be made.

But the downside of any perfectly logical aversion to offshore funds is that you could be missing out on performance. A good illustration of that is a fund we invested in recently – the Four Active UK equity fund.

This is a Ucits III fund, recognised by the FSA and therefore permitted to be marketed to UK private investors (not all offshore funds are), but domiciled in Dublin and therefore regulated by the Irish authorities.

Since its launch in April 2007, it has outperformed the FTSE All-Share Index by 7.9 per cent and outperformed the IMA UK All Companies sector by 11.1 per cent.

We have been impressed by the Four management team and think this is a boutique house which is likely to be an exciting performer over the coming years.

Its inclusion in the T Bailey UK best ideas fund demonstrates one of the unsung benefits of the multi-manager vehicle. It can enable an adviser, with minimum cost, admin and compliance concerns, to bring some of that offshore sparkle to a client portfolio.

For multi-managers, opening up the universe of funds beyond the UK presents opportunities. We do have the resources and expertise to analyse these funds and understand the offshore regulatory regimes governing them, although filling in those forms in can still be tedious.

And because we are often investing millions, we have access to managers – whether they are working for some of the biggest fund firms in the world, as with one of our US holdings, or for a small boutique that is aimed primarily at the institutional investor.

Through a fund of funds, your clients do not have to invest offshore directly to enjoy the benefits of offshore investing.

Elliot Farley is senior analyst at T Bailey


The death of retirement – a boost for protection?

According to our recent report on the death of retirement, changes in workplace pension provision mean that coming generations of retirees could have a radically different experience of retirement from their parents. The average contribution rate into an old-style final salary pension was around 20% of total wages, the statutory minimum for a new automatic […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm