Using Trusts to control your assets

Enable of Bishop’s Stortford’s independent financial advisors can see that with people living longer, and with many more having more complex family structures, as people often divorce, remarry  and sometimes have second families at older and older points in their lives, there is a place for Trusts in wealth management that is not all about tax avoidance.

The ONS figures for England and Wales in 2012 showed the biggest increase in the number of marriages was for men and women aged 65 - 69, rising 25 per cent and 21 per cent, respectively.

Trusts can be a vital tool for modern families, in helping to cope with children from different relationships, step-children and age-gap relationships and for making sure the right people receive money at the right point in their lives.

HMRC's own Research Report 25 says that tax is usually a secondary consideration in using a trust:

"The main motivation for setting up a trust appears to be related to control of assets, rather than tax planning as found in both the in-depth interviews and the survey of trustees.  While tax planning is important for some, it is usually cited second."

But HMRC's proposed extension of the Disclosure of Tax Avoidance Schemes (Dotas) rules could impact mainstream family situations. This new regime requires 'scheme promoters' to notify HMRC of a new scheme, which is then allocated a scheme reference number (SRN) which needs to be declared in their tax return. This information-gathering exercise is intended to be an alert system to HMRC, so any perceived abuse of the tax rules can be reviewed and action taken if required.

The consultation closes on 23 October. It's possible new rules could be in force for April 2015, but the timescale isn't clear yet. The gap between perception and reality can be large when trusts are viewed as a "tax avoidance scheme" lens, rather than as an everyday reality for further advice Enable’s IFA’s in Bishop’s Stortford are here to help.





Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

How has UK property fared recently in investments?

Enable’s IFA’s of Bishop’s Stortford know that property should be part of most investment portfolios in some form. Recently UK property has been regaining popularity with investors as an asset class but with a wide range of both open and closed-ended funds available it’s interesting to note which type of vehicle has been delivering the best performance for investors?

The IMA Property sector currently features 13 funds with a focus on UK bricks and mortar. Performance for the overall sector, which also includes funds investing in property outside of the UK market, has reached 6.89 per cent year to date.

The best performing Oeic year to date, and the only UK bricks and mortar fund to outperform the broader IMA sector, is the £792m Standard Life Investments UK Property fund which has returned 7.38 per cent since the start of this year.

This is followed by the Scottish Widows Investment Partnership Property Trust, which is the largest open-ended UK property fund at £3.03bn, with returns totaling 6.38 per cent.

The second largest UK property fund, the £3bn M&G Property Portfolio also proved the third top-performing fund so far in 2014 after returns reached 6.33 per cent year to date.

The worst performing open-ended vehicles year to date have been the Old Mutual Property and the £1.9bn Henderson UK Property funds which have both returned 5.03 per cent to investors since the start of the year.  If you are wondering what part property should plan in your portfolio Enable’s IFAs are here to help.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

What is Passive investing again?

Sometimes known as a buy-and-hold strategy, passive investing requires good initial research, patience and a well-diversified portfolio.  Unlike active investors, passive investors buy a security and typically don't actively attempt to profit from short-term price fluctuations. Passive investors instead rely on their belief that in the long term the overall investment will end up being profitable.

With passive investing, you don’t worry about what the price of gold is doing this week. Nor do you spend days buried in company reports trying to evaluate stocks. There’s no need to time the market, pick winning companies, or convince yourself that you have the special powers required to beat other investors. 

As a passive investor, you refuse to play The City’s game instead you use low-cost funds like index trackers called to reap the market’s return and increase your investments slowly.  There really is also a huge amount of evidence showing passive investing is the strategy that usually comes out top compared to believing the latest hot fund manager or investment scheme will be able to beat the market.

Passive investing is also as simple as investing gets. You need not have more than a handful of funds in your portfolio as long as they are spread across the key asset classes.  Passive investing is increasingly the first choice for many investors, with net sales of tracker funds in the UK reaching a record levels over recent years. Enable's experienced Independent Financial Advisors can help you take a look at whether passive investing is the way forward for you.


Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

English farmland for sale

Recently there has been much in the press about how English farm land presents a good investment opportunity for those who are inclined to spend their money on something valuable and hold onto it. The value of farmland in the UK has steadily continued to rise over the years and now ranks alongside gold as one of the best long-term investments over the past decade.

According to Knight Frank, land values have increased by an average of 208pc over the past 10 years, compared with a return of 254pc for gold, which has been one of the hottest assets for investors over the same period. Driven forward by growing interest from foreign investors and pension funds, farmland values in England continued to rise in the second quarter, a survey by the estate agent has revealed.

Knight Frank said average values for English farmland rose by 3pc in the second quarter to £7,515 per acre but that fewer landowners were placing estates on the market than a year earlier.
“Potentially there could be more pension fund and institutional buyers in the market,” wrote Tom Raynham, head of Knight Frank’s agricultural investment team. “There are some good deals happening off market.” The agent said that the acreage which has been advertised this year for sale publicly has fallen 17pc but anticipates that values will increase by a further 6pc over the next 12 months. If buying farmland direct is not for you Enables IFA’s in Bishop’s Stortford can help you make the right investment choices for your wealth management.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE 

Can you have your cake and eat it?

Enable’s IFA’s in Bishop’s Stortford have been wondering is the smart beta claims to offer above-index returns at passive prices are something to look at. The latest investment fad insists you can have the best of both worlds – the returns of active investment, at the cost of a passive strategy.

Smart beta, is being hailed as the answer to many a wealth manager, financial adviser – and pension trustee’s dilemma. While we are all facing downward pressure on fees it seems a good idea to use a blend of cleverly tweaked tracker funds and see the portfolio outperform it’s benchmark more than justifying  costs and charges.

Pensions minister Steve Webb has confirmed that from next April there will be a cap on pension charges of 0.75 per cent a year. Since the cap was initially proposed there has been a backlash among the pensions industry - AllianceBernstein argues that more expensive investment strategies will incorporate more investment sophistication, and features designed to get a better risk/return trade off, while Schroders says a price cap could place even further downward fee pressure on the investment component of the default; unsuitable for DC schemes where it is real outcomes that matter, rather than relative performance. So one solution being proffered up to bridge the void between performance and cost is smart beta.

To “Understanding Smart Beta”, one must first accept that there is a wider framework than the narrow definitions of alpha and beta that classic finance theory puts forward. In this framework, somewhere between alpha and beta, lies smart beta. Enable’s IFA’s are here to help.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Pension early encashment penalties

Last week the Government confirmed it will introduce a ‘permissive statutory override’ to ensure scheme rules do not prevent savers from accessing their pension fund when the reforms come into force next April. But some people who have legacy pension plans could still effectively be excluded from the reforms because of the charges they will face if they try to move their savings.

So how are some of the major players responding? Legal & General says it plans to review its books of business, including policies with exit fees attached, in light of the Budget changes. Asked whether they plan to offer the pension freedoms to all policyholders, an L&G spokesman said: “It is too early to say. We are reviewing our policies and have not finalised our position. “The majority of our customers will not have a penalty for encashment or transfer after age 55. In the minority of cases where policies have a charge for early encashment, the same charge is levied whether customers take a flexible retirement income from us or whether they move to another provider for their retirement income.”

A Skandia spokesman says: “There is still some underlying detail awaited from the draft legislation expected in a month’s time and we will be reviewing what is required to deliver the additional invested income solutions to all policyholders over the coming months."

Aviva head of policy John Lawson says: “Due to the difficulty in changing older IT systems, people with older-style plans may have to transfer to a new-style plan to take advantage of the new freedoms. “At this stage it is not possible to be categorical about which plans can be changed to cater for the new rules because the detailed rules have not yet been published.” Enables IFA’s in Bishop’s Stortford can help you consider your plans for your pension.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Active or Passive?

Enables IFA’s in Bishops Stortford have long been supports of passive investment strategies so it is good to see a recent Cass Business School study find that UK investors would be 1.44 per cent a year better off in a tracker fund. The 10-year study by David Blake, Tristan Caulfield, Christos Ioannidis and Ian Tonks discovered 99 per cent of equity funds did not beat their benchmark through stock selection or market timing, after fees were subtracted.

Examining the monthly returns of 516 UK open-ended equity funds between 1998 and 2008, the study revealed an average annual post-fee alpha return of negative 1.44 per cent. Pensions Institute director Blake says: “This suggests that a typical investor would be almost 1.44 per cent a year better off by switching to a low-cost passive UK equity tracker.” The “star manager” culture helped active management retain its lustre, Blake says, however just 1 per cent of managers are able to return more than trading and operating costs. “But – and here is one of our key findings – they extract the full rent from their skills in the fees that they charge,” the report says.

In a second paper, the Cass Business School authors argue funds should split once they hit “a critical size” to protect investor returns. Using the same data as the first study, they discovered annual alpha generation dropped 9 basis points for every 1 per cent increase in assets under management.
Large funds under perform smaller ones because the growing footprint in the same stocks pushes up prices and lowers yields, the report concludes. Blake said the findings suggest funds should consider splitting when they reach a critical size. Worth bearing in mind.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE