Bringing you live news and features since 2006 

Tax efficiency drives less than a quarter of high net worth offshore investment, says Verdict Financial


Despite the commonly-held belief that tax considerations primarily drive offshore investment, only 23.2 per cent of global high net worth (HNW) wealth is invested offshore for tax reasons, while 24.1 per cent derives from HNW individuals seeking access to a greater range of investment options, according to financial services research and insight firm Verdict Financial.

The company’s latest report states that wealth managers need to gain a deeper understanding of the drivers that are prompting HNW investors to look for new places to store their fortunes. Indeed, HNW individuals invest offshore for a multitude of reasons, which often depend on geographic and demographic factors, as well as political, economic or monetary conditions in their country of residence.

Verdict Financial’s senior analyst Heike van den Hoevel notes that, fuelled by recent scandals and increased media attention, the word "offshore" is overwhelmingly associated with tax avoidance or even evasion. However, while reducing one’s tax bill is certainly a consideration for many HNW individuals looking at offshore investment – especially among those in countries with high tax rates or a complex tax system – it is not necessarily the primary consideration.

Heike explains: “Wealth managers need to understand that there is no single reason driving HNW offshore investment, and that providers have to factor in pronounced regional differences when designing their offshore propositions. For example, German HNW investors, who traditionally only invest a small proportion abroad, have been increasing their offshore holdings, mainly due to the lack of returns that can be earned at home, while HNW individuals in South Africa have been eager to channel wealth offshore to escape currency volatility in their own country, which suggests that offering hedging tools is essential.

“Verdict Financial believes that local wealth managers would do well to offer a wider range of investment funds providing exposure to international markets to avoid losing funds to offshore providers. On the flipside, providers looking to attract offshore wealth should highlight more beneficial investment conditions in their country.”

Latest News

After a remarkably difficult 2022, fixed-income funds look to be back in favour with Europe’s investors as inflation fears begin..
CoinShares has announced the addition of two physically-backed Index ETPs to their growing range of crypto ETPs listed on Germany’s..
Just the two European launches this week with Fidelity bringing us a global government bond climate aware UCITS ETF and..
Ten new ETF solutions were launched for the week, each with a distinct value proposition for investors.  Detailed below are..

Related Articles

Vishal Kapoor, Bandhan Mutual Fund
ETF Express reported on a couple of ETF launches in India over the last couple of weeks, including the new...
ETF Awards
We are very pleased to bring you the winners in the 13th outing of the ETF Express European ETF Awards,...
Off the Record Episode 1
ETF Express is pleased to announce the launch of Off the Record, a new podcast series, in partnership with Truss...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by