Chapter 5 Flashcards
How are offshore non-reporting funds taxed on disposal for UK resident investors?
On disposal by a UK resident investor, all the gains are subject to income tax. As a result, capital gains and rolled up dividends and interest are subject to income tax rather than capital gains tax, so the investor cannot use their annual CGT allowance to reduce their tax liability.
Offshore funds - What % of the underlying assets must the fund have more than in cash deposits or fixed interest securities, for the distribution to be treated as an interest payment?
60%
What type of investments are ETP’s?
Passive
What do ETP’s aim to achieve?
ETP’s aim to replicate the performance of a given market, generally by tracking an underlying benchmark index
Do ETF’s have initial or exit charges?
No
What can be said about the ETF’s bid/ offer spread and total expense ratio (TER)
They are known to be low
What is ‘collateral risk’?
the collateral taken as security for stock that is loaned out is insufficient if it has to be realised to replace the securities loaned
What is ‘counterparty risk’?
the party to whom the securities have been lent fails to return the securities when demanded
What is the maximum % of a fund can invest in instruments issued by the same body relative to it’s NAV?
20%
What is the maximum % of a fund can invest in any swap counterparty relative to it’s NAV?
10%
What is an ‘Exchange-Traded Commodities (ETC)’?
An ETC is an investment vehicle that tracks the performance of an underlying commodity index, including total return indices based on a single commodity
Are ETC’s UCITS - 3 compliant
No
How are ‘Structured Product’ returns usually categorised as?
A Capital Gain
What wrapper can structured products usually be held within?
Self-Invested Personal Pension (SIPP)
What is a ‘Green Bond’?
Green bonds are issued by private firms and public entities to raise funds to finance projects that have a positive environmental impact, such as renewable energy and green construction of buildings.
What is a ‘Blue Bond’?
Blue bonds are similar to green bonds but the funds are raised to support projects related to ocean conservation and marine projects, such promoting biodiversity. The focus is also on wastewater treatment , prevention of water pollution and water-related clime change adaption
What is ‘Impact Debt’?
Impact bonds are designed to fund prevention and early intervention. impact debt is designed to be responsive to the needs of vulnerable groups to improve their lives
What is a ‘Social Bond’?
Sustainability bonds raise finance for a combination of both green and social bonds
What are the main market risks associated with real estate
The effect of changes in interest rates on valuations, the performance of individual property sectors and the prospects for rental income growth
