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Want to invest in an offshore actively managed fund? Here's how to find an investment style that suits you

by , 24 October 2014

Once you opt to invest in an offshore actively managed fund, you need to decide what style of management you're looking for.

Different investment styles reflect the fund manager's focus. This could range from macroeconomic factors to fundamentals of specific companies.

So what are the different investment styles of offshore actively managed funds?

Let's take a closer look…


The types of analysis for actively managed offshore funds


The styles of active management of offshore funds tend to fall into two main categories:

  • Top down; and
  • Bottom up.

A top down manager will focus more on the effects of macroeconomics and the knock-on impact to industries.

A bottom up manager will focus more on individual companies and their fundamentals.

Of course, fund managers tend to do a bit of both, but they have a stronger focus to one of the above categories.


The five main types of active management in offshore funds


A value fund manager
This is generally a bottom up approach. The fund manager’s goal is to buy companies at lower prices than they are actually worth.

This can be because the economy isn’t doing well, the companies are out of fashion or their trade is under pressure due to a multitude of factors.

A growth manager
This is usually also a bottom up approach. The fund manager is prepared to pay more for a share because of its potential growth.

The success of this kind of fund all comes down to how good a manager is at forecasting a company’s performance.

A business cycle manager
This is a top down approach. The fund manager focuses his investments on what’s going on in the economy. Depending on what part of the cycle the economy is in will determine what the manager invests in.

To succeed at this kind of analysis, a fund manager must be good at forecasting.

A thematic manager
This is also a top down approach. The fund manager looks for themes in the market and invests in companies that should benefit from them.

For example, if a fund manager is looking to the growing middle class in Asia, he might invest in motor companies and other high value goods companies as demand for these products should grow.

A contrarian manager
This type of fund manager wants to invest in areas that other investors don’t like. In other words, a fund manager like this tries to invest against the investment herd.

So there you have it. If you’re looking for an offshore actively managed fund, here’s how to find an investment style that suits you.

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Want to invest in an offshore actively managed fund? Here's how to find an investment style that suits you
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