Getting it right with international portfolio diversification

Despite the much awaited transition to a consumption and service-driven economy, the pulse of the Chinese economy is very much still investment led. The increasingly affluent population of Chinese individuals and corporations structuring their wealth offshore and diversifying their portfolios internationally presents a huge market potential for overseas portfolio management professionals. A great number of jurisdictions worldwide, either through public or private initiative, have taken the time to methodically build an understanding of the key market of Chinese high net worth individuals (HNWIs) and, to a great extent, have succeeded in getting them on board their showpiece tax-attractive and asset-protective structures and services.

The conceptual alliteration of the services available, particularly in Commonwealth and ex-Commonwealth jurisdictions, makes it a challenging task for HNWIs and their advisers in getting the top-tier jurisdiction of their structure right. The selection process will entail reasonably weighing up a number of variables and advice, all of which will ultimately be scrutinised against, and decided alongside with, implementation and long-term maintenance costs. The potential of acquiring a foreign citizenship and passport has arguably moved centre stage in jurisdiction decision making nowadays, as ever more HNWIs are seeking to couple investment returns with a generation-surviving legacy for themselves and their dependants.

Once the jurisdiction has been decided upon, it is of equal importance to consider who can be entrusted with administering the services in that jurisdiction. With the portfolio management landscape predominantly coloured in by legal professionals, tax advisers and corporate service providers of all shapes and sizes operating far from the locality of the HNWI, putting together the right decision-making variables becomes ever more important in choosing the right person for the job.

Nick Tsilimidos is an associate at L Papaphilippou & Co in Cyprus