The term "offshore fund" refers to the funds run outside the UK, usually in low tax areas. These include the Channel Islands, the Isle of Man, Cayman Islands, Hong Kong and Bermuda. In recent years Luxemburg and Dublin have become more significant also, as ‘tax havens’ within the European Union.

Many offshore funds are run by companies associated with large UK unit trust groups and most of the countries involved now have their own regulatory framework. Certain offshore funds receive recognition under the financial services and markets Act 2000 (FSMA 2000) and may be marketed in the UK.

Non-regulated and non re-cognised funds are subject to severe marketing restrictions in the UK

Prospectuses and details can only be forwarded to investment professionals such as stockbrokers and Independent Financial Advisers (IFAs).

Offshore funds that can be marketed into the UK

S264:

Funds that are recognised under the Undertaking for collective Investments in Transferable Securities (UCITS) Directive. See below for more details

S270:

Funds based in the designated territories, namely Jersey, Guernsey, Isle of Man, Bermuda, and recognised as satisfying FSA requirements.

The designated territories have similar regulation and investor protection at least equal to the UK.

These are termed ‘regulated’.

S272:

Funds based outside the EU and the designated territories but satisfy the FSA requirements individually.

These are termed ‘recognised’

Offshore OEICs

OEICs/ICVCs are the most common form of pooled investment in Europe. OEICs are based on the European type of ICVC known as Societe d’ investissement a Capital Viable (SICAV). Unit trust, in contract, are more like what are known in Europe as Fonds Commun de Placement (FCP).

 The attraction of the OEIC is that it can issue any number of types of shares. As we saw earlier, an OEIC is ‘open-ended’, because the total amount invested in the scheme can be increased.

 The ability to offer a wide number of types of shares led to the concept of umbrella funds. In this type of fund, there are many types of shares under one management (the umbrella). Each type of shares can invest in a different international sector.

 There is a wider range of funds offered to the investor through an offshore OEIC than an onshore unit or investment trust. The funds include UK Equity, International Equity, International Emerging Markets, International Managed, America, Europe, Japan, Latin America, India, Korea, Hong Kong, Australia, Commodities and Currency Funds (in all the major currencies) and fixed interest funds (in all the leading currencies: eg yen, sterling, euro, US$)