Offshore funds have been allowed into the IMA sectors since 2009 in an effort to give investors more choice and enable them to compare funds with similar strategies on a like-for like basis regardless of whether they are listed in the UK, Ireland, Luxembourg or elsewhere, providing the funds meet certain criteria.

But the question is whether the inclusion into the IMA sectors has made these vehicles more popular or whether investors are still wary of funds that are not based in the UK and put off by terms such as Sicav – (Société d’Investissement à Capital Variable).

Jeremy Leadsom, sales director for UK financial institutions at Aviva Investors, says: “We are on a journey that is seeing increased use of Sicavs in the UK. Traditionally the wealth areas of the retail banks and discretionary fund managers have been the main supporters of Sicavs, accounting for 60 per cent of our wealth management sales in the UK last year. Recently platforms have also started to see more and more Sicavs registered – we welcome this and hope it will continue.”

Recent IMA figures show the total funds under management in offshore funds registered for sale in the UK, which report data to the IMA, in April 2013 had reached £56.3bn, an increase of almost £10bn from the April 2012 figure of £46.4bn. Net retail sales into offshore vehicles have remained steady, with sales of £498m in April, the highest level since June 2012. Meanwhile total net retail sales for the first four months of 2013 reached £1.3bn. This compares favourably with the £3.4bn total net retail sales recorded for the whole of 2012.

The figures also highlight that while net retail sales are remaining positive and even growing in 2013, institutional sales into offshore vehicles are reversing, including net outflows of £127m in April.

Mr Leadsom adds: “At Aviva Investors we are in the process of registering our Sicavs with the IMA as this will increase their visibility in the UK. We tend not to duplicate strategies within our Oeic and Sicav ranges. The only time we may duplicate a strategy is when there is local demand and one structure is more tax efficient than another.”

However, even more than three years after offshore funds were allowed into the sectors there is still some doubt about whether the inclusion has made any difference to the popularity of these vehicles.

Celeste Dias-Brennan, head of product at Old Mutual Global Investors, notes: “I am not aware of any ‘success stories’ of offshore-domiciled funds being successfully sold into the UK adviser space. The reverse is true with UK-domiciled Ucits being sold across Europe and Asia, but it is taking longer for Dublin/Luxembourg funds to gain momentum in the UK market.”

That said, she adds that domicile of a funds should not be a barrier “provided the funds are Ucits and have the relevant tax share classes available”.

She adds: “It might just take a bit longer for UK advisers to get comfortable with advising clients to invest in non UK-domiciled funds. It goes back to the old hypothesis that the UK investor wants to invest in the UK – but this defeats the whole point around Ucits. In reality, there aren’t any valid reasons for this, it’s more of a subjective choice. Only time and education will help. We are testing this with our recent launch into the UK market of our Irish-domiciled US Dividend fund and to date, we have been encouraged by the reception of this fund.”

Darius McDermott, managing director of Chelsea Financial Services, agrees there has been limited impact from the inclusion of offshore funds, partly because there are more onshore options and partly because they are more attractive if they fill a gap in a niche area.

He notes: “We haven’t seen any real difference as there are still only a limited number of offshore funds on platforms. It won’t be until demand really picks up that this number will increase. So it’s not a case that they are being avoided, more that they are not as widely available and demand is still not there. As was the case three and a half years ago, offshore funds tend to be more popular when there is not an equivalent onshore fund.”

Currently there are approximately 482 offshore funds within the IMA sectors compared with almost 2,500 UK-domiciled funds, according to the IMA.

Offshore funds may have more visibility to UK investors by being in the IMA sectors, but they are also competing against a much bigger universe of UK-domiciled funds. In addition, even if their performance is much better than a UK-domiciled counterpart, unless they are available on the platforms that an adviser is using then they may be easily overlooked.

Nyree Stewart is deputy features editor at Investment Adviser