Tips for expat investors taking on unregulated funds

Published:  4 Dec at 6 PM
Want to get involved? Become a Featured Expat and take our interview.
Become a Local Expert and contribute articles.
Get in touch today!
With offshore banks closing down at a fast rate, expat investors may be confused about where to put their money next, and may be tempted to try unregulated funds.

The temptation to invest in high-risk, unregulated ,collective investment schemes for at least a short while is considerable, with prices rising across the globe and little chance of anything but low returns on conventional investment funds in the short-term. However, a major issue for many new investors in unregulated funds is gaining an understanding of how to identify possible risks.

Many such investments sound too good to be true – and that’s exactly what they are. Sorting the good from the bad begins with double-checking all aspects of the proffered fund.

Firstly, check whether the find manager’s charges are taken from the income or the capital invested – if from the capital, the investment is gradually siphoned off. Secondly, emerging markets are not for the inexperienced or unwary, although suggested returns can make your mouth water.

These investments can be tricky to sell, and volatility is a major issue as the markets are subject to increased peaks and troughs and are smaller than in established financial centres. A small fund with few assets and few investors carries much more risk than do larger funds with wider spreads and more investors.

Funds containing bond investments also have a higher risk due to the fact that companies have a far bigger chance of defaulting than do countries. Property investments are only for the experienced, as valuations are not guaranteed prices, and funds containing warrants, derivatives and other complex instruments are best avoided.

High-risk investments are unsuitable for the short-term and, whatever your choice, the small print needs to examined with a microscope and anything you don’t understand needs to be explained. Lastly and importantly, these funds are not covered by any government compensation scheme.
Like this news?

Comments » No published comments just yet for this article...

Feel free to have your say on this item. Go on... be the first!

Tell us Your Thoughts On This Piece:

Your Name *
Email * (not published, needs verification one time only)
  • Facebook
  • Follow us on Twitter
  • RSS feed
  • Facebook

Latest Headlines

News Links

News Archive