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Post by Wisealpha on Apr 18, 2017 16:38:31 GMT
The answer may be with bonds,is that if you do not understand them that its worth paying for a fund manager to do it for you as you will still only pay about 1%(or even cheaper via a tracker/etf).Looking at Citywire table today from end of Feb 16 to end of Feb 17 there are 61 sterling strategic bond funds.Of these 30 have made over 10% and the highest are at 16-18% with an average across all funds of 10.1%.While the fund manager may not get it right all the time you would hope they would have a better idea of when to buy and sell i.e Matalan @ 15 or 19%.But what you get with wiseAlpha is the fun of doing it yourself and running your own account. Yes, WiseAlpha is about liberalising markets and giving access to individuals who want to learn and build their investment acumen. Incedentally had we started operating a few months earlier all of our investors would be sitting on approx. 14-17% return based on the bonds we purchased given the price move post Brexit (sterling bonds sold off prior to fears around Brexit but then stabilised and market confidence came back). Instead it's approx between 7-8% gross if you have bought into everything.
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Post by Wisealpha on Apr 18, 2017 16:43:11 GMT
Does anyone know the tax treatment for buying those bonds at 85% with redemption 100% at maturity? Are those 15% taxed as interest or as capital gains and when? How would be the treatment if investing in bonds above par i.e. >100%? HI Msa while we cannot provide tax advice our reporting is set up for you to use capital gains/losses and income data in your tax return.
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Post by Wisealpha on Apr 18, 2017 16:47:48 GMT
It would also be good to know the tax treatment in the case of a default. I get the feeling that wiseAlpha isn't (normal) P2P so we canot offset losses under the normal P2P offsetting and we have to go down the full capital losses tax rules? We do intend to look into this in the near future and seek clarification on this from the HMRC and Treasury but we should be able to make the argument that our product should be treated in a uniform manner rather than having subtle differences in capital loss tax rules.
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Post by Wisealpha on Apr 18, 2017 17:14:19 GMT
kaya Here are price and yield charts for this bond (MTNLN 6.875% 2019) The price has risen from 77 to 85 in the last few months (yield has dropped from 19% to 15%) so price is near one year high. Matalan's bonds (issued via a special purpose entity, Matalan Finance plc) are rated B3 (highly speculative) by Moody's and CCC (substantial risks) by S&P (for ratings guide see link). Both downgraded their rating of Matalan in the last few months (Jan 18 for S&P and Nov 9 for Moody's). These bonds are listed in Luxembourg, so while they may be secured on the main PLC, they are two steps removed (the SPV issuer being step 1), and under a separate jurisdiction. This presumably adds to the risk profile. It's common for tax structuring reasons that most of the issuers in our asset class list their bonds and set up SPV issuers outside of the UK. This risk is tempered by the fact that the SPV issuer typically has a customary pledge over the shares of the operational entities below it which in turn have first ranking security and charges over the assets (in the case of senior secured bonds and loans) and guarantees in the case of subordinated bonds which rank ahead of equity holders. In addition the prospectus' (i.e the legal contract of the issuer with investors is typically governed under English law to ensure jurisdictional risk is limited in default situations where lender consents/restructuring process/enforcement occurs.
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kaya
Member of DD Central
Posts: 1,150
Likes: 718
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Post by kaya on Apr 19, 2017 8:56:01 GMT
Thanks for all your responses Wisealpha rep. which I have always found knowledgable and reassuring. There is much potential for Wisealpha to grow, methinks.
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Post by Wisealpha on Apr 19, 2017 11:11:03 GMT
What I mean by that is that we intend to just seek clarification that the treatment of capital losses can be treated in exactly the same manner as for P2P loans versus general retail investments. Obviously we aim to avoid default losses and so far we haven't had a single default and in our view it's not likely we'll have as many defaults (if any) as P2P platforms but we are unique and it will be good to have clarification that there is a fair uniform standard so investors can offset losses they make on P2P platforms with income and capital gains they make on WiseAlpha and vice versa.
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