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Thinking about investing in offshore funds? Check these five factors first…

by , 28 July 2015

Since the financial crisis, large banks and financial institutions have been paying large sums in fines thanks to market manipulation.

It's understandable why investors are more than cautious since then.

So if you're thinking about investing in offshore funds, how can you find the best fund manager for your cash?

Read on to find out…


Ways to evaluate offshore funds before investing


If you want to invest in offshore funds, you need to do your homework in this massive sector.

Here’s what you should look at before investing, as Tim Price in Money Week explains…


Offshore fund factor #1: Does the fund manager have an interest in the fund?


If a fund manager has money in his own fund, it’s usually a positive signal. Of course, it doesn’t guarantee the fund will perform any better, but at least he’s got money at stake too.


Offshore fund factor #2: Independent checking


Ensure that a fund doesn’t used in-house audit and custody functions. It’s prudent to look for funds with administration independent from the fund manager.


Offshore fund factor #3: The size of the fund


Big isn’t always better when it comes to funds. As a fund manager’s pay tends to relate to the size of the fund, there is a push to grow assets under management.

It may be worth looking at smaller investment boutiques for more manageable fund sizes. They have more room to grow.


Offshore fund factor #4: Smaller fund managers can be cheaper


The larger a fund manager is, the more ‘fat’ it will carry in terms of staff and overheads. This means more salaries and costs to pay, which can result in higher costs for you.

Smaller independent fund managers may provide a lower cost structure than larger fund managers and are worth checking out.


Offshore fund factor #5: Past performance


As disclaimers tell you, the past isn’t a guide to future performance. But to you as an investor it is important. You want to see that a fund manager has performed well over a period of time, particularly when the market’s not been performing well.

So there you have it. Check these five factors before investing in offshore funds.

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Thinking about investing in offshore funds? Check these five factors first…
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