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If you want to invest in an offshore fund, does the size of the fund matter?

by , 20 October 2014

When it comes to making offshore investments, one option you have is to invest in a fund.

This avoids you having to pick individual shares. And you can opt for a general market fund or look to more specific sectors.

So should you opt for a large fund or a small fund? And does it make a difference?

Let's take a closer look…


Weighing up small offshore funds


Just because an offshore fund is small in size doesn’t mean it’s a bad thing. If it’s popular, growing in size and the expenses aren’t high in comparison to larger funds, it can be a good option.

Small funds can actually be easier to manage and because of that, perform better.

But you need to check out a few things first before investing…

A small fund may not be a good idea to invest in if it’s falling out of favour with investors, shrinking in size and charging high fees.

Fewer investors in a fund means there are less people to share the costs of the fund. This can lead to poorer performance and higher ongoing fees.

On the other hand, if the fund is new, then it’s not surprising that it’s small.

Check out the manager’s past performance. If he has a good track record, then the size of the fund shouldn’t worry you.


The advantages of picking a large offshore fund


With large offshore funds, many of the issues facing smaller funds aren’t a concern. In many cases, a large fund comes with lower costs.

But size can become an issue if the fund becomes too big. It’s harder for the fund manager to move money around. And the fund’s strategy may have to change due to its large size.


How to make the pick the best offshore fund for you


The performance of a fund is hard to link up to its size.

Your main focus should be the fund manager. You want to know how the fund manager has performed in the past. And this should be your primary concern when selecting an offshore fund.

So there you have it. Why the size of a fund doesn’t really matter when you invest in an offshore fund.

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