Offshore investing may be deemed as deposits or investments held in jurisdictions other than that of one’s residence. Such investments may be considerably more complicated than local investments due to a number of factors as highlighted below:
This is the risk attributable to the variation in exchange rates in currencies. One’s foreign-denominated assets may enjoy capital gains but may result in losses when those prices are converted back to the domestic currency.
Information asymmetry on the part of the investor
This simply means that you, as a resident in your domestic country, may not know what exactly is going on in another country (in which you have acquired assets) and as such cannot make appropriate investment decisions with regards to these foreign countries.
While these two factors make it significantly riskier to engage in offshore trading activities, offshore investing has some inherent benefits that may make it very well worth investing. Furthermore, analysts predict the Australian to appreciate against the UK dollar making offshore investments even more attractive.
But the question remains, are there any documented successes of offshore share trading? Yes! Many investors have benefited from offshore investing specifically from investing in offshore investment funds.
We outline 5 of the best performing funds in regard to their 5–year returns:
Old Mutual UK Smaller Companies Focus Fund – 183.3 % return
This fund is a portfolio of UK smaller companies within the exchange. Primarily supervised by fund manager Nick Williamson, the fund aims at providing capital growth for its investors. Smaller companies are deemed to be any firms with a market capitalisation no greater than that of the largest company in the Numis Smaller Companies index at the time of initial investment. This return, over a period of 3 years, is quite impressive considering the efficiency of the UK markets. Furthermore, the fund has a return of 108.9% over the first 3 – year period. The recent conducive environment in 2017 in Britain saw companies enjoy better business leading to higher share prices.
Atlantis Japan Opportunities USD – 159.25% return
The Atlantis Japan Opportunities Fund consists of equities and equity – related instruments issued by listed companies in Japan. The fund is managed by Taeko Setaishi aims at providing long – term growth to their investors. This fund doesn’t have any restrictions on market capitalisation of the equities and has shown a consistent average return of 40% for the last 5 years. Considering the fact that the fund is invested fully in equities (an asset class that is characterized by higher volatility than other investment classes and thus riskier), a consistent return indicates immense discipline on the part of the manager.
Dragon Vietnam Equity Fund – 146% return
The Vietnam Equity Fund invests in a portfolio comprised primarily of equities of companies listed in Vietnam or with significant exposure to Vietnam. The portfolio also consists of debt securities to reduce the risk exposure resulting from the equities and provide regular income to investors. The fund is managed by Quynh Le Yen and doesn’t have any restrictions on market capitalisation.
Lindsell Train Japanese Equity B Sterling Fund
This fund is invested in a portfolio comprised of equities listed in Japanese stock markets. The fund is benchmarked against the TOPIX and has the goal of long – term growth of shareholder’s capital.
Polar Capital UK Absolute Equity Fund – 99.98% return
The Polar Capital UK Equity Fund invests in a portfolio comprised primarily of equities listed within the UK and to a lesser degree in European as well as global equities. The fund is managed by Guy Rushton and does not have any restrictions on capitalisation.
Offshore investing presents more risks than investing in domestically available assets. However, as shown above offshore funds present massive opportunities for investors. Any investor looking to grow their portfolio should consider investing in an offshore fund.