while residing in the uk what is the idea behind investing in off shore stock exchanges?

Question

are the returns tax free?

Answer 1

I'm not familiar with UK law, but I doubt the returns would be tax free.

To answer your original question, though, there is something to be said for diversification of your portfolio. Suppose that a substantial portion of your investments are in one county's stock exchanges. Further suppose that there is an economic slowdown or recession in that one country. Your portfolio would take a big hit if it was consolidated in only one country. (Just ask us folks here in the US about our markets over the last week or so, for example, and most of that was probably driven by international economic worries.) However, if you have a portfolio a bit more spread out in multiple countries, you're a little less likely to take such a huge hit over local economic issues. All of that is in theory, anyway. If there was a global recession, of course, all bets on that theory would be off since everything would tumble if that was the case. Lucky for us investors, thats not the case right now.