Offshore investment funds - in effect unit trusts based in such tax havens as the Channel Islands or Luxembourg - can consequently be much more expensive than at first sight, making cost comparisons with equivalent unit and investment trusts or even between offshore funds potentially "grossly misleading", according to Richard Timberlake of the London-based Timberlake & Company, who compiled the survey.
In addition, he says there are few legal tax advantages in investing in offshore funds, and tax evasion can be caught easily.
Offshore funds may carry significant "hidden extra" charges that can drastically reduce investment returns. Typically extras nearly double the quoted annual management fee and are higher than for most other important types of investment. Funds with high charges tend not to justify them with better performance.
"[The extra charges] can be a hell of a handicap. Going round the [investment] racetrack they add of lot of extra weight," says Mr Timberlake. He also part-runs a unit trust company, Portfolio, which invests wholly in other investment funds, including those based offshore.
In some cases, offshore investment funds can appear to carry lower charges than equivalent unit trusts. But the extra charges typically double the quoted fee to a total of more than 2 per cent a year of the value of your investment, creating that much bigger a drag on your investment's growth.
Unit and investment trusts also carry extra charges - but smaller - and in total will normally charge less than 2 per cent a year.
Mr Timberlake says that investors should particularly beware offshore funds that have been launch- ed recently or have less than $10m (pounds 6.5m) under management. Fixed costs on these funds tend to make their overall level of charges a higher percentage of the investment.
Investors considering an offshore fund should ask any management company what a fund's "total expense ratio" is. This includes the stated annual fee plus the hidden extras.
Most companies should be able to provide this TER figure even though they do not publish it. And regulators, if genuinely interested in investor protection, should insist on funds publishing the figures in their reports and accounts, he says. "Anything over 2.5 per cent should send the red lights flashing."
Lower-charging offshore funds include those of Morgan Grenfell, Rothschild and Lazard, and Guinness Flight's funds investing in shares (but not those investing in bonds). Among the higher-charging are Fidelity, Hypo Foreign & Colonial, Barclays, Midland, Sun Life and Templeton. The survey, however, notes the huge variance incharges. Some funds can even be cheaper than equivalent unit trusts. And, Mr Timberlake says, higher charges may be justified - for example for specialist emergxing market funds
In addition, he notes that money put offshore simply to evade tax can be just as easily caught offshore as it would be if kept in mainland UK. The Inland Revenue could simply demand to see the records of the companies managing the money, he says. "If the taxman was looking for cheats, they would look offshore first."
He says the tax benefits of going offshore for most investors are "illusory". The main benefit is only cash flow - income is paid gross but it is still liable for income tax.
Most investors looking for tax shelters should stick to such mainstream vehicles as PEPs or Tessas, where all returns are tax-free subject to certain conditions.