If he chooses the offshore fund, he can deduct his hefty investment fees, which often are 2% of assets.
Using a "blocker" corporation allows investors to delay the payment of the 3.8% tax by letting income build up in the offshore fund.
Soros, on the other hand, manages a huge offshore hedge fund for wealthy individuals and institutions.
As of March, its offshore global macro fund had posted an annualised return of 9.5% since inception, but its returns and those of its onshore Brazilian fund have dwindled over the past two years.
According to Micropal, his LG Asian Smaller Companies Fund has been the best-performing offshore ex-Japan Far East fund during nearly every period since it was launched in 1992.
For example, say John has a choice of putting money in a domestic hedge fund or an offshore mirror version.
It is especially useful in private equity because a partner's original investment in a fund is often made through an offshore trust.
Mr. HALL: Well, for one thing, I think you first need to recognize that we all read newspapers and we are aware of the tax breaks that have gone to the very wealthy, especially the hedge fund managers, who put a lot of their assets offshore.
Fitzrovia calculates that while the number of offshore equity funds has doubled since 1993, the size of the average fund is unchanged.
The fund has also appeared on FORBES GLOBAL's lists of top offshore funds on several occasions.
An IMF official familiar with Equatorial Guinea, speaking on condition of anonymity, says the fund is "quite concerned" about the country's use of offshore bank accounts and lack of a published budget.
The backstory: since the 1970s the Land and Water Conservation Fund (which, only semi-ironically, gets its money from federal royalties from offshore oil and gas drilling) has given money to local governments for parks.
Under the rules of the fund, institutional and individual investors raising capital in the Chinese currency, the yuan, from offshore markets like Hong Kong will be able to make direct investments in China.
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