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Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
Cil   kinesis presentation - v1 01-09 10
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Cil kinesis presentation - v1 01-09 10

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Transcript

  • 1. Capital International LimitedKinesisAntony Kelsey
    This presentation is intended for FSA authorised persons, high net worth individuals and professional investors
  • 2. Agenda
    Introduction to Kinesis
    History of the market
    Advantages / Disadvantages of the market
    Dismissing the stereotypes
    Kinesis in detail
    Kinesis v direct investment
    Kinesis benefit comparison
    Kinesis investment options
    Kinesis fees
    Regulation
    Doing business
  • 3. Introduction to Kinesis
    An alternative to direct investment, delivering equivalent investment performance
    But Kinesis returns are tax free (no CGT and no income tax)
    Clients, and advisers, define the investment strategy
    Kinesis is as low risk as clients want it to be
    Tax treatment occurs because Kinesis is structured as a spread bet
    Returns from spread bets are tax free in the UK
  • 4. What is Spread Betting?
    A method of speculating on the price of an instrument without actually owning any shares or derivatives
    A financial spread bet allows a trader to bet on whether they believe that the price quoted for a particular financial instrument, such as shares or the FTSE 100 index, is likely to go up in value or go down in value
    Contracts are often leveraged as clients make only a small deposit relative to the size of the bet (e.g. £10k for £100k bet):
  • 5. History of Spread Betting in UK
    1974 ‘Investors Gold Index’ was created to allow investors to trade on the price of gold
    IG Index quickly introduced forex and commodities
    1980s and 90s very niche – low financial sophistication and poor technology
    Around 2000 dot.com boom brought greater public focus on share prices and massive online trading improvements
    Crash allowed spread bet traders to profit by short-selling
    Professional traders recognise spread betting as a high risk alternative investment strategy to yield quick tax-free profits
    Today it is increasingly “retail”
  • 6. Spread Betting today
    Beginners Guides / Free education
    Bets from as lows as 10p per point
    Bets on shares, indices, forex, commodities, property price indices, interest rates, options, sports results
    Margin variable but typically 10%
    No longer just professionals…
    adverts in newspapers, billboards, television…
    Well established and accepted taxation treatment
  • 7. Advantages
    Returns are tax free in the UK*
    No direct ownership of underlying assets
    Deposit only required (meaning that capital works harder)
    Streamlined pricing
    Reduced currency risk
    Easy to go “short” as well as “long”
    Disadvantages
    • Leverage
    • 8. Limited choice of assets
    • 9. Specialist reputation
    * Note: losses cannot be offset against other capital gains and returns can be taxed as income if client has no income from other sources aside from spread betting activity
  • 10. Dismissing the stereotypes
    Spread betting…
    is not inherently risky
    does allow virtually any type of asset to be held in a spread-bet in any combination
    does not have to be leveraged
    is not just for professionals
    does not have to be complicated
    has a generous tax treatment which is unlikely to change
  • 11. Why does HMRC allow it?
    As many make losses as make gains via spread bets
    HMRC enjoy gaming duty and corporate tax on spread betting firm profits
    Returns are taxed as income if client’s spread-betting activity is sufficient to be deemed a “trade”
  • 12. Kinesis in Detail
    Kinesis is a spread bet account
    Each client can set up their own bespoke Specialist Reference Index (SRI)
    Client and adviser define the assets to be included in the SRI (it can replicate existing client portfolios or investment strategies)
    Assets can be: equities, gilts, corporate bonds, unit trusts, OEICs, hedge funds, loan notes, private equity, structured products…
    Index priced monthly – for every £1 the index increases, clients win £1 and for every £1 the index decreases, clients lose £1
  • 13. Kinesis in Detail cont’d
    Capital require 100% margin from client (i.e. no leverage risk)
    By holding investments via a spread bet, rather than directly, clients create tax free returns
    Clients and their advisers define the risk of assets held
    Contract rolls every three months so clients can access all their money every 3 months – there is no lock-in and no surrender fees
    Tax treatment is also “locked in” every 3 months
  • 14. Kinesis in Detail cont’d
    Capital use the 100% margin to purchase the assets selected in the SRI via a dedicated subsidiary company (CFM)
    Price of the SRI reflects the value and price movements of the assets in CFM
    So, although CFM own the investment assets, the client receives the performance via the index price to which the spread bet account is linked
    Capital’s liabilities are therefore 100% hedged at all times
    CFM’s assets are completely ring-fenced from all other activity and from Capital’s own assets
  • 15. Kinesis v Direct Investment
    While Kinesis can replicate the investment returns of existing portfolios via the creation of bespoke SRIs, it is via its tax savings that Kinesis outperforms:
  • 16. Kinesis Benefit Comparison
    Kinesis SIPP Offshore Bond Direct
    Max investment
    Withdrawals
    Capital Gains Tax
    Income Tax
    Unlimited
    Unlimited
    £1.8 million
    Unlimited
    Annual CGT
    allowance
    5% capital
    withdrawals
    3 monthly
    Post 55
    0%
    0%
    0%
    28%
    Relief on
    Contributions
    but up to 50%
    On benefits taken
    Up to 50%
    Up to 50%
    0%
  • 17. Kinesis Investment Options
    Clients and their advisers have complete flexibility to nominate assets for their SRI
    Assets can be: equities, gilts, corporate bonds, unit trusts, OEICs, hedge funds, loan notes, private equity, structured products…
    Discretionary Fund Managers (including Capital) can be appointed to make asset selection
    Capital discretionary managed portfolio service (Fusion) can be included
    Cash only cannot be selected – could be deemed a “one-way” bet
  • 18. Kinesis Fees
    Each 3 month bet (open & roll) has 0.1% Fee
    SRI Set up Fee of 1%
    SRI Annual Management Charge of 0.7%
    Adviser commission added to SRI fees
    SRI performance will also reflect costs of underlying investments (just as if the client were holding the investments directly)
    Therefore Capital’s Kinesis fees are the opportunity cost of the Kinesis tax savings
  • 19. Key Reminders
    Clients own Kinesis (not underlying assets)
    Clients define the investment risk of Kinesis by nominating the assets in their own bespoke SRI
    Clients must pay 100% margin into Kinesis
    Losses are limited to their margin (just as if they invested directly), assuming bet is “long”
    Returns from Kinesis are currently tax free
    Clients assets are available every 3 months
    Clients assets are ring-fenced
  • 20. Doing Business…
    Independent Financial Advisers
    • All IFAs must complete Terms of Business
    • 21. IFAs will need to complete an SRI Application Form
    SRI Manager or Adviser
    • We will require a separate form where a third party is to either manage or advise on an SRI
    Client
    • Clients must sign the Application Form
    • 22. Clients must sign a Due Diligence Form
    • 23. Clients must sign the Risk Warning
    In-Specie Transfer
    • Client must sign separate form where existing assets are to be transferred in specie
    Due Diligence
  • 24. Questions
    Antony KelseyT: +44 (0) 1624 654213E: a.kelsey@capital-iom.com
  • 25. Regulatory Notice
    This presentation has been prepared for information purposes only, is intended FSA authorised persons, its duly authorised officers or agents, high net worth individuals and professional investors only. It does not constitute an offer or an invitation, by or on behalf of Capital International Limited, to buy or sell any security. This presentation is not intended for circulation to persons who would constitute a private or inexperienced investor.
    The information contained herein is believed to be correct, but its accuracy cannot be guaranteed.
    Any reference to past performance is not necessarily a guide to the future. Opinions constitute our judgement as of this date and are subject to change. The company, its clients and officers may have a position in, or engage in transactions in any of the securities mentioned.
    The price of a security may go down as well as up and its value may be adversely affected by currency fluctuations.
    Capital International Limited is a member of the London Stock Exchange.Capital International Limited and Capital Financial Markets Limited are members of the Capital International Group.Capital International Limited is licensed by the Isle of Man Supervision Commission. Capital Financial Markets Limited is licensed by the Isle of Man Financial Supervision Commission.
    .
    CIL - Kinesis Presentation - V1.01-09.10
  • 26. Contact Details
    Capital International LimitedCapital HouseCircular RoadDouglasIsle of ManIM1 1AG
    T : +44 (0) 1624 654200F: +44 (0) 1624 654201E: info@capital-iom.com

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