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How to become a secret offshore financial centre investor for just £25 a month
10/11/2017 , Ian Orton

Want to join the uber rich in taking advantage of the investment opportunities offered by Offshore Financial Centres (OFCs) like all those people, endowments and companies identified in the Paradise Papers?

It’s really easy.

And you don’t have to have billions of pounds or dollars to qualify. Indeed you don’t have to have millions, tens of thousands or even the odd thousand. A monthly investment of just £25 will do.

Moreover, as this particular investment is eligible for inclusion within an Individual Savings Account (ISA) and a Self Invested Personal Pension (SIPP) you will receive additional tax advantages courtesy of the British government and HMRC.

Furthermore, you can invest alongside Lord Rothschild and his family, its biggest individual shareholders, who held 36.22 percent of its equity at 31 December 2016. 

And should you take advantage of its low cost savings scheme your holding, which almost certainly will be held in a nominee account, you will be virtually anonymous from inquisitive voyeurs, if not not HMRC (if anything is anonymous these days when just about anything and everything held in a computer is hacked or leaked). 

So step forward RIT Capital Partners, a London-listed investment company, with net assets of £2.77 billion at 30 June 2017.   

RIT Capital Partners holds a very diverse portfolio of investments that encapsulates multiple asset classes.

According to its most recent interim report quoted investments accounted for 55.1 percent of its portfolio; private investments 22.2 percent; “absolute return and credit” 23.0 percent; “real assets” 3.2 percent; “government bonds and rates” 0.2 percent; and “currency” 0.8 percent. “Liquidity, borrowings and other” accounted for 4.5 percent.

Look at the detailed breakdown of portfolio holdings on pages five to seven of the interim report and it will quickly become apparent that investment vehicles registered in or operated from OFCs account for a not inconsiderable proportion.

Indeed HCIF Offshore, the first long only fund listed on page five, should give the game away. This is an all-cap biotechnology fund registered in the Cayman Islands. RIT’s holding amounted to £135.4 million or 4.9 percent of net asset value (NAV).

Other offshore vehicles that immediately stood out in the long only listing included Dublin-based Lansdowne Developed Market Strategic Fund and the Emerging India Focus Fund, which is incorporated in Mauritius.

The former, which is managed by London-based Lansdowne Partners, accounted for £82.8 million, or 3.0 percent of NAV. The latter, an open-ended fund, accounted for £30.4 million, or 1.1 percent of NAV.

It is more difficult to identify the provenance of many of the other funds held by RIT Capital. Its listing generally gives the name and location of the manager rather than the jurisdiction in which the actual fund is registered, incorporated or domiciled.

Given, however, that in addition to the eight long-only funds listed RIT also held seven named hedge funds along with a number of unspecified others; seven named “private” fund investments, i.e. venture capital and private equity funds, along with a number unspecified others; and ten names absolute return and credit funds, together with a number of unspecified others, it is almost a certainty that many of these will have some form of OFC connection.

Whether or not the connection is with relatively near OFCs like Dublin, Luxembourg or the Channel Islands or with more exotic locations like Bermuda, the British Virgin Islands, the Cayman Islands, or even Delaware is difficult to establish (at least for the moment).

RIT Capital Partners plc is far from an isolated example, however.

The reality is that for any vehicle that pursues a multi-asset class investment strategy, let alone a global perspective, investing in offshore vehicles is a normality. Many other London-listed investment companies adopt similar strategies. And of course it is almost a certainty for the listed fund of hedge funds or funds of private equity funds.

Not all have savings schemes with such a low savings scheme minimum as £25, however. 

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