Offshore Mutual Funds

Offshore mutual funds are funds that are set up offshore. A mutual fund is a group of investors operating through a fund manager to purchase a diverse portfolio of stocks or bonds. The fund manager has the experience and knowledge needed to make the most of investments. The fund manager decides which bonds, stocks and other investments to put the funds into for the best outcome for the entire group. There are different kinds of mutual funds, each with its own purposes and methodologies.

One of the many reasons to invest in mutual funds is that these funds have tax advantages. Offshore mutual funds are generally located in tax exempt countries where the client is not a resident. Such jurisdictions include the Cayman Islands, the Bahamas and Isle of Man. If one invests in offshore mutual funds, it is important to know what taxes apply to avoid tax evasion or criminal charges that may result if the laws are not followed.

Offshore mutual funds are used to invest money for maximum growth and return. These funds are not without some risk, however, and it is possible to lose investments. Offshore mutual funds have the advantage of being professionally managed, so that the investment portfolio for the fund is well diversified to minimize any risks to the investment capital of the fund.

Main advantages of offshore mutual funds:

• Offshore tax free capital gains
• Unrestricted investment options
• Lower fund management costs
• Higher investor returns
• Greater operational flexibility
• Fewer regulations
• Lower level of regulations

Types of mutual funds:

Open-end funds must be willing to buy back shares from investors at the end of every business day at the net asset value computed that day. Most open-end funds also sell shares to the public every business day; these shares are also priced at net asset value.

Closed-end funds generally issue shares to the public only once, when they are created through an initial public offering. The shares are then listed for trading on a stock exchange

Unit investment trusts issue shares to the public only once, when they are created. Investors can redeem shares directly with the fund (as with an open-end fund) or they may also be able to sell their shares in the market.. Unit investment trusts generally have a limited life strong, established at creation.

Exchange-traded funds are often structured as an open-end investment company, though they may also be structured as unit investment trusts, partnerships, investments trust, grantor trusts or bonds. Exchange traded funds have characteristics of both closed-end funds and open-end funds. Like closed-end funds, they are traded throughout the day on a stock exchange at a price determined by the market. However, as with open-end funds, investors normally receive a price that is close to net asset value.

Popular jurisdictions:

• Cayman Islands
• Bahamas
• Bermuda
• Channel Islands
• Isle of Man
• Anguilla
• Luxembourg
• Netherlands
• BVI