PER­SONAL AC­COUNT

The Daily Telegraph - Your Money - - FRONT PAGE - Richard Dyson

The lat­est from the Par­adise Pa­pers – we all have off­shore in­vest­ments

Like the Queen, most of us don’t know pre­cisely – or even vaguely – where our sav­ings are in­vested. Un­like the Queen, we don’t get to learn about the minute de­tail of our in­vest­ments from the front pages of the news­pa­pers.

Yet most of us prob­a­bly own the same or very sim­i­lar in­vest­ments as Her Majesty – just less of them.

This is how it works. Mil­lions of us con­trib­ute to Isas, and mil­lions more are build­ing up pen­sions through work or pri­vate in­vest­ment. We pay monthly pre­mi­ums into en­dow­ment poli­cies and other types of in­vest­ment plans. We give to char­i­ties, some of which is in­vested.

Those bil­lions of pounds are poured into thou­sands of dif­fer­ent port­fo­lios which, in turn, buy thou­sands of in­di­vid­ual in­vest­ments – of­ten based all over the globe. There may be ad­di­tional lay­ers, where a sin­gle hold­ing within one port­fo­lio owns many more hold­ings it­self, and so on.

Some­where, in all that, there’s a high like­li­hood that we will own a small frac­tion of a busi­ness or fund that is reg­is­tered – or in tech­ni­cal terms “domi­ciled” – in a coun­try such as the Cay­man Is­lands, Bri­tish Vir­gin Is­lands or Ber­muda.

Two re­cent trends have in­creased the like­li­hood of this be­ing the case. First, in­vest­ing has be­come more global. A com­pany sell­ing in­vest­ment ser­vices to Bri­tish savers is in­creas­ingly likely to want to sell them to Amer­i­cans as well – and places such as the Cay­man Is­lands al­low just that.

Se­cond, there has been a huge push among pro­fes­sional in­vestors to put money into new types of as­set. In par­tic­u­lar, these new in­vest­ments in­clude pri­vate eq­uity funds and hedge funds. Most of these are reg­is­tered off­shore. The in­vest­ment man­agers might be in Lon­don, but the in­vest­ments are tech­ni­cally owned by com­pa­nies in Ber­muda.

So how ex­actly did the Queen get to own shares in a com­pany ac­cused of ex­ploit­ing the poor?

The Duchy of Lan­caster, which over­sees the monarch’s as­sets, put a small frac­tion of its as­sets – re­ported to be un­der 0.5pc – into a Cay­man­reg­is­tered pri­vate eq­uity fund called Dover Street VI. This fund, in turn, put money into an­other ve­hi­cle, which then backed con­tro­ver­sial hire-pur­chase busi­ness Bright­house.

Your pen­sion is al­most cer­tainly do­ing some­thing sim­i­lar. A moun­tain­ous £1.8 tril­lion is in­vested on be­half of Bri­tain’s com­pany pen­sion savers, and of this 7pc, or £126bn, is in­vested in hedge funds, a large pro­por­tion of which will have a Cay­man reg­is­tra­tion. Pri­vate eq­uity funds – that’s the sort the Queen is in­vested in – are also com­monly reg­is­tered off­shore.

Even main­stream in­vest­ments, the sorts of funds rec­om­mended ev­ery day by fi­nan­cial ad­vis­ers, for ex­am­ple, might be reg­is­tered in nearer-to-home tax havens such as Jer­sey or the Isle of Man. Or, if they are not reg­is­tered there them­selves, they will own in­vest­ments that have links to those havens. Take

Many if not most pen­sion savers will have in­vest­ments linked to ‘ tax havens’ such as the Cay­man Is­lands, above

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