Which combination of characteristics describes the advantages of offshore collective investment funds compared with direct stock investments? (i) Lower dealing costs (ii) Less administration (iii) More control over stock selection.

• A. (i) and (ii) only.
• B. (i) and (iii) only.
• C. (ii) and (iii) only.
• D. (i), (ii) and (iii).

Answer: (A)

Offshore collective investment funds leverage pooled capital and professional management, which brings about cost efficiencies and less admin for the individual investor. When a fund trades for a large pool of money, dealing costs per unit tend to be lower than if you were buying and selling many individual stocks yourself, and the fund shoulders much of the administrative burden—record-keeping, tax reporting, compliance—so the investor has fewer paperwork tasks. In contrast, you don’t get to choose the specific stocks held; the fund manager makes those decisions, so you don’t have increased control over stock selection. So the best combination is lower dealing costs and less administration.