Facts about funds
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What are offshore funds?
Offshore funds are funds domiciled outside the UK. Those which are UCITS established in other EEA (European Economic Area) member states can be promoted to UK retail investors. Other funds which may be promoted to UK retail investors may come from the Channel Islands, the Isle of Man or Bermuda. Such funds may be unit trusts or OEICs, or contractual funds or ‘SICAVs’ from Europe.
Contractual funds are schemes established under contract law and are broadly similar to unit trusts.
SICAV is the French term for an 'OEIC' – it is an investment company that is 'open-ended’ (ie. its shares can be bought or sold on any dealing day). However, rather than there being an ACD (Authorised Corporate Director), there tends to be a board of individual directors, which may or may not appoint an investment manager.
The core rules for UCITS are common across Europe but some countries have additional requirements. For example, in the UK, every fund must have an authorised management company. Also, the trustee or depositary is required to be in a completely different group from the manager, which ensures that the oversight of the manager is fully independent.
Helpful hints
Rules on the validity of complaints and your entitlement to compensation in case of wrongdoing also vary depending on where the fund is domiciled. So, even when buying a European UCITS, check whether the UK complaints and compensation procedures apply. If you are not sure what the regulated status of a fund is, visit the financial regulator's website at www.fsa.gov.uk/register/cisSearchForm.do |
Read our guide to investing in offshore funds for more information