Thursday, 21 January 2010
QROPS ADVICE: Investment News: INDIA BENCHMARK STOCKS RISE
India's benchmark stock index may rise as much as 20 percent this year, led by lenders and information technology companies as earnings growth gains pace, UTI Asset Management Co. predicts. "It's just a matter of time before you see consumption really taking off in financial services and others," Harsha Upadhyaya, a fund manager with UTI who manages about USD1.1 billion in equities, said. "Per capita income for the working class has been doubling every five to six years."
Wednesday, 20 January 2010
QROPS ADVICE: Spotlight on Absolute Return Funds
Being a relatively new type of asset, you would be forgiven for not knowing a great deal about Absolute Return funds, although recent market volatility has ensured that they have quickly become one of the most popular investment choices around, with the majority of the world's biggest fund managers having such a fund in their range.
A fund manager running an Absolute Return strategy aims to generate positive returns in any stock market cycle, by deploying techniques that are able to profit from both the ups and downs in markets and stock prices. The opportunity to use such techniques is relatively new and is possible as a result of an EU Directive introduced in February 2007; UCITS III (Undertakings for Collective Investments in Tansferable Securities). A major effect of the directive, in addition to where a fund can be marketed, is to allow greater flexibility in the investment powers of the manager.
The general concept is not too dissimilar to traditional pension funds, which retreat to defensive, fixed interest investments as the client's risk profile gradually becomes less adventurous. Or a 'mixed asset' fund, that can hold both equity and fixed interest-based investments dependent on market conditions (albeit at set, prescribed amounts in accordance with the fund's constitution). Each of these types of funds will make a profit when the value of the assets into which they invest increases, however, being able to make a profit when the value of such assets decreases is what distinguishes Absolute Return funds from their traditional counterparts.
Generally, there are two techniques employed to achieve this. The first is to use 'short selling'; this is selling a stock that is not owned by the fund manager hoping the price will go down, then buying it back at a lower price to settle the trade, making a profit on the whole transaction. The second technique is using the wider asset types now available and diversifying with supposedly non-correlated assets, using the 'if one goes down the other goes up' approach. The one great advantage of the funds is the manager's ability to give protection in falling markets by using derivatives, which is not possible with funds that don't take advantage of the UCITS III rules.
Such is the popularity of Absolute Return funds, figures released by the UK's Investment Management Association show that that the Absolute Return fund sector was the highest selling sector in September 2009 - accounting for GBP442 million of net retail inflows, and overtaking the Sterling Corporate Bond fund sector which had spent 10 consecutive months at the top of the sales chart.
Most Absolute Return funds will concentrate on a particular asset type or geographic focus, Vincent Devlin of BlackRock Investments, Manager of the recently launched Hansard BlackRock European Absolute Return Strategies Fund (MX51, available in HIL and HEL) commented on the outlook for the European-focussed fund in 2010, "We expect market returns will continue to be driven by stock-specific factors and we are focusing our fundamental research on companies where there is a likelihood of earnings upgrades. In our view, this environment is well suited to our bottom-up fundamental investment approach."
Contact 01664 444625 to discuss you investment requirements or email derry.thornalley@aifsg.com
A fund manager running an Absolute Return strategy aims to generate positive returns in any stock market cycle, by deploying techniques that are able to profit from both the ups and downs in markets and stock prices. The opportunity to use such techniques is relatively new and is possible as a result of an EU Directive introduced in February 2007; UCITS III (Undertakings for Collective Investments in Tansferable Securities). A major effect of the directive, in addition to where a fund can be marketed, is to allow greater flexibility in the investment powers of the manager.
The general concept is not too dissimilar to traditional pension funds, which retreat to defensive, fixed interest investments as the client's risk profile gradually becomes less adventurous. Or a 'mixed asset' fund, that can hold both equity and fixed interest-based investments dependent on market conditions (albeit at set, prescribed amounts in accordance with the fund's constitution). Each of these types of funds will make a profit when the value of the assets into which they invest increases, however, being able to make a profit when the value of such assets decreases is what distinguishes Absolute Return funds from their traditional counterparts.
Generally, there are two techniques employed to achieve this. The first is to use 'short selling'; this is selling a stock that is not owned by the fund manager hoping the price will go down, then buying it back at a lower price to settle the trade, making a profit on the whole transaction. The second technique is using the wider asset types now available and diversifying with supposedly non-correlated assets, using the 'if one goes down the other goes up' approach. The one great advantage of the funds is the manager's ability to give protection in falling markets by using derivatives, which is not possible with funds that don't take advantage of the UCITS III rules.
Such is the popularity of Absolute Return funds, figures released by the UK's Investment Management Association show that that the Absolute Return fund sector was the highest selling sector in September 2009 - accounting for GBP442 million of net retail inflows, and overtaking the Sterling Corporate Bond fund sector which had spent 10 consecutive months at the top of the sales chart.
Most Absolute Return funds will concentrate on a particular asset type or geographic focus, Vincent Devlin of BlackRock Investments, Manager of the recently launched Hansard BlackRock European Absolute Return Strategies Fund (MX51, available in HIL and HEL) commented on the outlook for the European-focussed fund in 2010, "We expect market returns will continue to be driven by stock-specific factors and we are focusing our fundamental research on companies where there is a likelihood of earnings upgrades. In our view, this environment is well suited to our bottom-up fundamental investment approach."
Contact 01664 444625 to discuss you investment requirements or email derry.thornalley@aifsg.com
Monday, 18 January 2010
QROPS ADVICE: Trouble QROPS up for NZ but Gib gets the OK
Gibraltar has been given the green light by the UK as a QROPS domicile after agreeing to revise its pen-sion legislation.
Its long-awaited stamp of approval follows high-level talks between Treasury offi-cials and the territory's chief minister Peter Caruana, sources said. Details of the deal were not immediately available but it is believed it will involve a change to Gibraltar's pension law.
Since the middle of last year, Gibraltar trustees of QROPS have voluntarily suspended pension trans-fers from the UK, pend-ing resolution of HMRC's concerns.
The territory taxes the pension income of people over 60 at 0%, and it is this provision that was the focus of HMRC's concern.
The Gibraltar move comes amid growing unease at schemes in New Zealand offering 100% encashment. The country is now believed to be under new scrutiny as a suit-able home for UK pensions as schemes offering 100% encashment have rung alarm bells within HMRC. This has raised speculation that the country may follow Singapore in being barred as a QROPS domicile.
Pension trustees in other jurisdictions have been receiving increasing requests for transfers from their own schemes to New Zealand, in some cases with advisers specifically stating the intention is for their client to cash-in 100% of their pension.
Such actions fly in the face of the UK's stance on overseas pensions. Although transfers can be made to jurisdictions where benefits are taxed and paid in varying ways, an over-riding principle is that any egy, suffering from lower yields and costly voids."
George Hankinson, managing director of LCP, added prices were likely to climb again soon, particu-larly as foreign investors return to the market.
The cost of the fund's gearing is 1% over the Bank of England base rate, a financing levy few private
Projected fund returns
350
pension savings are to be used in retirement.
New Zealand has a far less prescriptive pension framework than the UK and some schemes allow 100% commutation from age 18. For advisers, trans-acting such business can be lucrative. Some charge clients up to $600 per transfer plus fees in excess of 7% when the commuta-tion is completed.
HMRC declined to com-ment on any probe but industry sources have con-firmed they have supplied it with information on New Zealand schemes fol-lowing requests. In 2008, investors would be able to attain on a mortgage.
The fund has a mini-mum investment of £50,000 and adviser commission is available.
It is eligible for SIPP, SSAS, PEP and ISA inves-
tors, and offshore inves-tors who qualify for capital gains and inheritance tax exemptions.
all Singapore pensions were stripped of QROPS approval after HMRC found some were promot-ing 'pension-busting'.
Roger Berry, manag-ing director of Guernsey QROPS provider Concept Group, said: "The last thing we wish to see is a repeat of the Singapore loss of approval. This caused great difficulty for those involved and suppressed the market by creating doubt in the minds of those contemplat-ing transfers."
In another development, Malta last month received approval from HMRC as a
QROPS domicile.
http://www.international-adviser.com
Its long-awaited stamp of approval follows high-level talks between Treasury offi-cials and the territory's chief minister Peter Caruana, sources said. Details of the deal were not immediately available but it is believed it will involve a change to Gibraltar's pension law.
Since the middle of last year, Gibraltar trustees of QROPS have voluntarily suspended pension trans-fers from the UK, pend-ing resolution of HMRC's concerns.
The territory taxes the pension income of people over 60 at 0%, and it is this provision that was the focus of HMRC's concern.
The Gibraltar move comes amid growing unease at schemes in New Zealand offering 100% encashment. The country is now believed to be under new scrutiny as a suit-able home for UK pensions as schemes offering 100% encashment have rung alarm bells within HMRC. This has raised speculation that the country may follow Singapore in being barred as a QROPS domicile.
Pension trustees in other jurisdictions have been receiving increasing requests for transfers from their own schemes to New Zealand, in some cases with advisers specifically stating the intention is for their client to cash-in 100% of their pension.
Such actions fly in the face of the UK's stance on overseas pensions. Although transfers can be made to jurisdictions where benefits are taxed and paid in varying ways, an over-riding principle is that any egy, suffering from lower yields and costly voids."
George Hankinson, managing director of LCP, added prices were likely to climb again soon, particu-larly as foreign investors return to the market.
The cost of the fund's gearing is 1% over the Bank of England base rate, a financing levy few private
Projected fund returns
350
pension savings are to be used in retirement.
New Zealand has a far less prescriptive pension framework than the UK and some schemes allow 100% commutation from age 18. For advisers, trans-acting such business can be lucrative. Some charge clients up to $600 per transfer plus fees in excess of 7% when the commuta-tion is completed.
HMRC declined to com-ment on any probe but industry sources have con-firmed they have supplied it with information on New Zealand schemes fol-lowing requests. In 2008, investors would be able to attain on a mortgage.
The fund has a mini-mum investment of £50,000 and adviser commission is available.
It is eligible for SIPP, SSAS, PEP and ISA inves-
tors, and offshore inves-tors who qualify for capital gains and inheritance tax exemptions.
all Singapore pensions were stripped of QROPS approval after HMRC found some were promot-ing 'pension-busting'.
Roger Berry, manag-ing director of Guernsey QROPS provider Concept Group, said: "The last thing we wish to see is a repeat of the Singapore loss of approval. This caused great difficulty for those involved and suppressed the market by creating doubt in the minds of those contemplat-ing transfers."
In another development, Malta last month received approval from HMRC as a
QROPS domicile.
http://www.international-adviser.com
Saturday, 16 January 2010
QROPS ADVICE: Investment News: Spotlight on Cautious Managed Funds
The sustained volatility of equity and bond funds, coupled with poor bank deposit returns, has brought a significant increase in interest around Cautious Managed funds which, as their name suggests, offer investors a medium to low risk exposure to a broad range of assets. In accordance with their constitution (from the UK's Investment Management Association), Cautious Managed funds invest in a range of assets with a maximum equity exposure restricted to 60 percent and at least 30 percent invested in fixed interest and/or cash.
Whilst a variety of emerging market equity funds stormed to the top of the fund performance charts in 2009, it was funds that fell into the Cautious Managed sector that proved one of the most popular in terms of investment inflow, second only to the UK Corporate Bond sector, according to figures recently released by the UK fund supermarket, FundsNetwork. This clearly demonstrates investor's appetite for risk and suggests that whilst the majority are happy to re-enter back into the market via equity related assets, they are seemingly more comfortable doing this with a fund manager bound by the restrictions of staying at least 30 percent invested in fixed interest assets.
Those that chose to invest solely in equity related funds will have reaped some rewards for their risk taking in 2009, with the majority of asset classes returning an impressive, positive result. However, the investment profile of the majority is such that they can ill afford to take the risk of placing all of their investment into equities, and instead rely on the investment expertise of a fund manager that has the experience to finely balance their investment between equities and fixed interest stocks, more so during volatile times. This is evidenced in the fact that the average Cautious Managed fund achieved a 15.6 percent gain in 2009 (source: Lipper, 01/01/2009-31/12/2009), a return that, considering the uncertainty in the markets during the period, would be considered impressive by most.
One of the funds that did particularly well last year, achieving 24.2 percent growth was the Investec Cautious Managed fund (C09, available in both HIL and HEL). Alistair Mundy, the manager of the fund looked forward to 2010, commenting "We believe that the easier money has been made on the most cyclical parts of the UK market, but that a number of shares, while likely to remain volatile, still offer good long term value. We particularly believe that many of the largest stocks in the market remain cheap and that their dividend yields and strong balance sheets make them very attractive. We continue to believe that long bond yields are vulnerable to both higher inflation and increased gilt issuance."
Whilst a variety of emerging market equity funds stormed to the top of the fund performance charts in 2009, it was funds that fell into the Cautious Managed sector that proved one of the most popular in terms of investment inflow, second only to the UK Corporate Bond sector, according to figures recently released by the UK fund supermarket, FundsNetwork. This clearly demonstrates investor's appetite for risk and suggests that whilst the majority are happy to re-enter back into the market via equity related assets, they are seemingly more comfortable doing this with a fund manager bound by the restrictions of staying at least 30 percent invested in fixed interest assets.
Those that chose to invest solely in equity related funds will have reaped some rewards for their risk taking in 2009, with the majority of asset classes returning an impressive, positive result. However, the investment profile of the majority is such that they can ill afford to take the risk of placing all of their investment into equities, and instead rely on the investment expertise of a fund manager that has the experience to finely balance their investment between equities and fixed interest stocks, more so during volatile times. This is evidenced in the fact that the average Cautious Managed fund achieved a 15.6 percent gain in 2009 (source: Lipper, 01/01/2009-31/12/2009), a return that, considering the uncertainty in the markets during the period, would be considered impressive by most.
One of the funds that did particularly well last year, achieving 24.2 percent growth was the Investec Cautious Managed fund (C09, available in both HIL and HEL). Alistair Mundy, the manager of the fund looked forward to 2010, commenting "We believe that the easier money has been made on the most cyclical parts of the UK market, but that a number of shares, while likely to remain volatile, still offer good long term value. We particularly believe that many of the largest stocks in the market remain cheap and that their dividend yields and strong balance sheets make them very attractive. We continue to believe that long bond yields are vulnerable to both higher inflation and increased gilt issuance."
Wednesday, 13 January 2010
QROPS Advice: HMRC spells out Qrops property ban
HM Revenue & Customs has issued clarification that residential property is not a permitted investment within qualified recognised overseas pension schemes before or after the five-year reporting period.
The note, published online in an HMRC manual last week, states that an unauthorised payment charge is not dependent on how long a member has been non-resident. It says: “It applies regardless of whether or not a transfer member has been non-resident for more than five tax years. Nor is there any time limit on the requirement that the manager of a Qrops reports to HMRC any payments that are referrable to a transfer member’s taxable asset transfer fund.”
Advisers say HMRC’s decision to reiterate this in its legislation is due to misinterpretations by schemes and advisers is a new step. AES International managing director Sam Instone says: “A couple of Guernsey providers have been putting exotic investments into their Qrops, such as residential property, fine wine and antiques, and bending the rules, so HMRC has issued clarification.”
Global Qrops director Paul Davies says: “There was probably a lot of ambiguity about what you could and could not do after the five-year period for investments so HMRC has reconfirmed its position in plain English. Anyone transferring their UK pension across to a Qrops cannot under any circumstances use that money within a Qrops to invest in residential property.”
By Hannah Stodell
The note, published online in an HMRC manual last week, states that an unauthorised payment charge is not dependent on how long a member has been non-resident. It says: “It applies regardless of whether or not a transfer member has been non-resident for more than five tax years. Nor is there any time limit on the requirement that the manager of a Qrops reports to HMRC any payments that are referrable to a transfer member’s taxable asset transfer fund.”
Advisers say HMRC’s decision to reiterate this in its legislation is due to misinterpretations by schemes and advisers is a new step. AES International managing director Sam Instone says: “A couple of Guernsey providers have been putting exotic investments into their Qrops, such as residential property, fine wine and antiques, and bending the rules, so HMRC has issued clarification.”
Global Qrops director Paul Davies says: “There was probably a lot of ambiguity about what you could and could not do after the five-year period for investments so HMRC has reconfirmed its position in plain English. Anyone transferring their UK pension across to a Qrops cannot under any circumstances use that money within a Qrops to invest in residential property.”
By Hannah Stodell
Tuesday, 12 January 2010
QROPS ADVICE: Gibraltar reaches deal with UK government over Qrops
The UK Treasury has agreed to recognise Gibraltar Qrops, following high level talks between Treasury officials and Gibraltar chief minister Peter Caruana, sources told International Adviser.
A spokesman for HM Revenue & Customs declined to confirm the report, however, without providing details or addressing the Gibraltar situation specifically.
He reiterated the Revenue’s previously-stated position that there are “a number of generally-applicable conditions that have to be met in order for a pension scheme to be eligible to be a QROPS”, and said HMRC will “continue to... review and consider whether the conditions to be a QROPS are met by any schemes that have applied”.
The HMRC statement conflicts with reports out of Gibraltar, where a source familiar with the status of negotiations between it and the Treasury said an agreement "has been reached that resolves the issue, to the satisfaction of the industry in Gibraltar and the government in Gibraltar, as well as the UK Treasury”.
Caruana did not return phone calls seeking comment.
Details on the deal were not available, but it is understood that it would oblige some aspect of law in Gibraltar to be amended to satisfy HMRC. The legal change is expected to be introduced early in 2010.
Since the middle of last year, trustees of Qrops in Gibraltar have voluntarily suspended pension transfers from the UK, pending resolution of HMRC’s concerns. The Revenue’s concerns first came in the form of letters received in the spring by Gibraltar pension trustees which asked them for clarification of local rules regarding taxation of retirement income.
Gibraltar taxes the pension income of people over 60 at 0%, and it is this provision that is the focus of HMRC’s concern. HMRC is said to regard a 0% tax as inconsistent with Qrops regulations.
Gibraltar Qrops administrators will be delighted to hear that the agreement has been reached, since news of the UK tax authorities’ interest in the matter and the suspension of pension transfers has damaged Gibraltar’s Qrops industry’s image, while giving rivals in other jurisdictions an advantage.
In recent weeks, many Gibraltar Qrops administrators had become increasingly critical of HMRC’s continued delay in approving Gibraltar as a qualifying destination.
News of the deal between Gibraltar's Qrops administrators and HMRC came as Qrops Adviser, a Brussels-based advisory business, reported on its website that HMRC was considering removing "hundreds" of Qrops from its register of recognised providers as part of a tax crackdown. Again, HMRC declined to comment specifically.
Qrops, or Qualified Recognised Overseas Pension Schemes, are a form of pension based outside of the UK, which is recognised by UK authorities as being eligible to take transfers from registered UK pension funds. They were introduced out of the A-day changes to UK pension regulations that took effect on 6 April, 2006.
http://www.international-adviser.com/lwm/article/1065
A spokesman for HM Revenue & Customs declined to confirm the report, however, without providing details or addressing the Gibraltar situation specifically.
He reiterated the Revenue’s previously-stated position that there are “a number of generally-applicable conditions that have to be met in order for a pension scheme to be eligible to be a QROPS”, and said HMRC will “continue to... review and consider whether the conditions to be a QROPS are met by any schemes that have applied”.
The HMRC statement conflicts with reports out of Gibraltar, where a source familiar with the status of negotiations between it and the Treasury said an agreement "has been reached that resolves the issue, to the satisfaction of the industry in Gibraltar and the government in Gibraltar, as well as the UK Treasury”.
Caruana did not return phone calls seeking comment.
Details on the deal were not available, but it is understood that it would oblige some aspect of law in Gibraltar to be amended to satisfy HMRC. The legal change is expected to be introduced early in 2010.
Since the middle of last year, trustees of Qrops in Gibraltar have voluntarily suspended pension transfers from the UK, pending resolution of HMRC’s concerns. The Revenue’s concerns first came in the form of letters received in the spring by Gibraltar pension trustees which asked them for clarification of local rules regarding taxation of retirement income.
Gibraltar taxes the pension income of people over 60 at 0%, and it is this provision that is the focus of HMRC’s concern. HMRC is said to regard a 0% tax as inconsistent with Qrops regulations.
Gibraltar Qrops administrators will be delighted to hear that the agreement has been reached, since news of the UK tax authorities’ interest in the matter and the suspension of pension transfers has damaged Gibraltar’s Qrops industry’s image, while giving rivals in other jurisdictions an advantage.
In recent weeks, many Gibraltar Qrops administrators had become increasingly critical of HMRC’s continued delay in approving Gibraltar as a qualifying destination.
News of the deal between Gibraltar's Qrops administrators and HMRC came as Qrops Adviser, a Brussels-based advisory business, reported on its website that HMRC was considering removing "hundreds" of Qrops from its register of recognised providers as part of a tax crackdown. Again, HMRC declined to comment specifically.
Qrops, or Qualified Recognised Overseas Pension Schemes, are a form of pension based outside of the UK, which is recognised by UK authorities as being eligible to take transfers from registered UK pension funds. They were introduced out of the A-day changes to UK pension regulations that took effect on 6 April, 2006.
http://www.international-adviser.com/lwm/article/1065
QROPS ADVICE: UK expats choosing to retire overseas rather than return
UK expats who move overseas to live and work are increasingly choosing not to return home, according to research by Isle of Man bank Alliance & Leicester International (ALIL).
The cost of retiring in the UK was cited as a major factor for expats deciding not to return, ALIL said. It highlighted a recent estimate that it cost expats more than £400,000 to do so, according to website www.lifetrust.com. France remains the top retirement spot, with 18% of those surveyed naming it as their country of choice, followed by Spain, with 13%. The UK was only just behind; 12% of the 600 expats surveyed by ALIL said they would return home to retire. Almost 60% of expats intended to retire in Europe in order to be close to their families, found ALIL, which noted 10% of respondents said the major bar to remaining outside the UK was being away from friends and family. Expats intended to fund their lifestyle overseas through a variety of methods .Better quality of life, weather and value for money were the three top reasons for wanting to retire overseas. But retiring abroad does not come without worries. Among expats’ main concerns were the quality of medical care and facilities, followed by general medical issues – including dealing with an emergency in a foreign language.
The cost of retiring in the UK was cited as a major factor for expats deciding not to return, ALIL said. It highlighted a recent estimate that it cost expats more than £400,000 to do so, according to website www.lifetrust.com. France remains the top retirement spot, with 18% of those surveyed naming it as their country of choice, followed by Spain, with 13%. The UK was only just behind; 12% of the 600 expats surveyed by ALIL said they would return home to retire. Almost 60% of expats intended to retire in Europe in order to be close to their families, found ALIL, which noted 10% of respondents said the major bar to remaining outside the UK was being away from friends and family. Expats intended to fund their lifestyle overseas through a variety of methods .Better quality of life, weather and value for money were the three top reasons for wanting to retire overseas. But retiring abroad does not come without worries. Among expats’ main concerns were the quality of medical care and facilities, followed by general medical issues – including dealing with an emergency in a foreign language.
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