Which statements correctly describe the relative advantages of offshore collective investment funds compared with direct investment in stocks and shares? (i) Lower dealing costs (ii) Less administration (iii) More control over individual stock selection.

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

Answer: (C)

When you invest through an offshore collective investment fund, you benefit from pooling resources, which creates efficiencies that reduce costs for each investor. The fund can execute trades for a large pool of assets, spreading dealing costs over many units and often negotiating better rates than an individual could achieve, so dealing costs are typically lower than if you bought and sold the same stocks directly.

Administration is also lighter for the individual: the fund handles much of the paperwork, custody, dividend handling, performance reporting, and regulatory compliance. That means you don’t have to manage these tasks yourself, which reduces your personal administrative burden compared with direct stock ownership.

However, you don’t have control over individual stock selections when you invest in a fund—the fund manager makes those decisions for the portfolio. So, while costs and admin may be reduced, you trade off the ability to pick specific stocks.