Funds based outside the tax system of the country where the intended investor is residing. A fund which is legally based in the Channel Islands, the Bahamas or Cayman Islands, for instance, is an offshore fund.
These funds operate from one of the many offshore centres outside the UK to obtain a tax advantage. These funds are similar to Unit Trusts but normally fall outside UK regulation. Some funds in certain countries can still receive a form of UK authorisation.
Collective investment funds run outside the UK. Usually minimal regulatory oversight (and investor protection) and lower tax regime than the UK, EU or US.