An offshore mutual fund is simply a collective investment scheme situated in an offshore financial centre. It has been created to attract investments from both individual investors and corporate investors globally; it is not seeking investment from people or companies residing in the native country where the investment scheme is domiciled. The most popular location for these financial centre’s include Jersey, Guernsey Isle of Man, Luxembourg, British Virgin Islands and the Cayman Islands.
Investors should seek information full details on any offshore fund prior to purchase, the power of the internet brings key features and performance history in just a few clicks of the mouse. Look at the cost to buy the fund, the management fee and if any exit fees apply. I good option is to use fund platforms, they will offer discount rates and incorporate added features like email tracking so you can enter the market when prices are most favourable or exit is you have realized a gain.
There are three general investor classes for mutual funds, in most cases the fund managers and the fund research websites will grade each offshore into one of the categories that follow.
Conservative growth offshore funds are suitable for investors who are not money hungry. These investments yield low but stable returns. They are often purchased by older clients to secure retirement benefits for them, and by investors not wishing to incur portfolio losses.
Moderate growth offshore funds have a balanced pattern of growth and risk level in the investment. They are suitable for investors who are neither risk adverse nor risk takers. Almost all investors will have a proportion of their holdings in this sector.
Aggressive growth funds usually show a high potential for growth and involve high volatility as well as risk. Such offshore funds are often coupled with high uncertainty and are not good for risk adverse investors. However, if investors purchase as a long-term hold then when they do perform as expected the upside is often quite spectacular and deemed to be worth the risk taken.
Fund research should also review the market conditions in terms of inflation and interest rates, political stability, international relations and any other global problem that could affect fund profitability. The greatest benefit of mutual funds is that the investor has an easy route to add funds from different markets, different regions, and different risk categories to diminish risk.
Here are a few types of mutual funds: Money market mutual funds involve debt instruments like treasury bills. They gain most of the time but offer very low yield rates. Fixed income mutual securities involve investment in preferred shares, bonds, mortgages and other income securities that by their nature preserve the investor’s capital, returns are better than treasury bills since it is a private company not a government that offers these funds for investors.. Equity mutual funds normally trade on investments in the stock market. They often pursue an aggressive growth strategy with high gains expected at the risk of volatility along the way.
The overall performance of mutual funds depends not only on the sector it is invested in, it also depends on how much the management fees are for running that specific fund and at what price you entered that specific fund. By researching market sectors, looking at best performers with sensible management fees and then buying via a discount platform you can make a difference to your overall returns.