Wednesday 5 December 2012
Chancellor's Autumn Statement
Pleasantly surprised by the Chancellor's speech today. Given that he has nothing to work with he managed a generally upbeat message and some genuine creativity.
Ultimately, our fate is decided not just on these shores but by the state of the global economy and until it picks up in a sustained manner our ability to control our own destiny is limited, albeit much less so than if we'd be in the Eurozone.
We may all have to be patient for a long time yet, so I'll be making sure that my investments are well-diversified, primed to give me protection when, inevitably thanks to Quantitative Easing, inflation takes hold and keeping a bit in cash for buying opportunities when the markets react adversely to bad news.
Tuesday 4 September 2012
Our Sept/Oct Digital Magazine
Wednesday 29 August 2012
Morningstar, the research company, has published its list of the worst-performing funds in the UK over the past five years, as follows:-
1. Rathbone Recovery Fund
48% cumulative loss over the last five years
2. Scottish Widows Investment Partnership UK Real Estate Fund
45% cumulative loss over the last five years
3. Manek Growth Fund
41% cumulative loss over the last five years
4. UBS UK Smaller Companies Fund
41% cumulative loss over the last five years
5. Neptune Green Planet Fund
41% cumulative loss over the last five years
6. Standard Life Select Property Fund
40% cumulative loss over the last five years
7. Aberdeen Property Share Fund
38% cumulative loss over the last five years
8. JP Morgan Global Financials Fund
37% cumulative loss over the last five years
9. SVM Global Opportunities Fund
37% cumulative loss over the last five years
10. Artemis European Growth Fund
35% cumulative loss over the last five years
Morningstar OBSR Analyst Rating: Bronze
These are the worst out of 1300 funds but looking at these figures in isolation doesn't mean much - for example, the worst performer has actually performed really well over the past three years i.e. since they changed the investment strategy.
It all shows the folly of people trying to pick funds themselves - better results can be obtained by paying for the expert advice that my firm and others offer.
Please note that past performance may be no guide to future performance and the capital value and income arising from asset-backed investments can fall as well as rise.
Friday 6 July 2012
We would like to congratulate Hugh McGoldrick (a recent intern of Carrington Wealth Management) on his successful climb up Mont Blanc in aid of Macmillan Cancer Support. As you can see from the pictures this is the highest point yet for our corporate logo!
When Senior Partner Steve Laird presented him with our sponsorship cheque earlier today Hugh confessed that it had been much tougher than he'd expected. His next challenge is to climb Everest, which he plans to do in 2016! We wish him well.
Tuesday 13 March 2012
Concrete trampolines
I'm working in Spain this week and have been advising a new client on how to invest their spare capital. Having done our research it was clear that one of two 'Spanish' bond providers would be best, so we put together a portfolio for him and requested the illustrations.
The first provider can only produce a generic illustration - so no details of the funds or their charges and thus about as much use as a concrete trampoline. Their illustration assumed growth rates of 6% and 8% per annum. The other provider listed the funds and used growth rates of 5, 7 and 9% per annum. Apparently, neither provider can change their projection rates making a straight comparison virtually impossible. A little further digging and I found that both providers had completely ignored the underlying fund managers's annual charges (part of which they receive) when producing the illustration, because the client isn't in the UK and so they can get away with it.
I wonder what they expect me to say to the client - perhaps 'here is a misleading illustration designed to make Company X's bond look cheaper than most of the others'. I don't think he'd be very impressed - do you?
The first provider can only produce a generic illustration - so no details of the funds or their charges and thus about as much use as a concrete trampoline. Their illustration assumed growth rates of 6% and 8% per annum. The other provider listed the funds and used growth rates of 5, 7 and 9% per annum. Apparently, neither provider can change their projection rates making a straight comparison virtually impossible. A little further digging and I found that both providers had completely ignored the underlying fund managers's annual charges (part of which they receive) when producing the illustration, because the client isn't in the UK and so they can get away with it.
I wonder what they expect me to say to the client - perhaps 'here is a misleading illustration designed to make Company X's bond look cheaper than most of the others'. I don't think he'd be very impressed - do you?
Tuesday 6 March 2012
Why you shouldn't expect justice from the Spanish Supreme Court.
Brits and other foreign nationals who sold property in Spain before the end of 2006 paid 35% capital gains tax on the profit compared to the typical 15% paid by Spanish citizens.
The European Court of Justice found that this was a clear breach of the Agreement on the European Economic Area of 1992. Under EU legal principles the consequences of the judgement were that Spain should refund the difference between the tax that was paid and the tax that should have been paid.
In Spain the refunding of an illegal tax is not automatic. The Supreme Court in Spain has decided not to bother.
The full text of the letter I've received from my lawyers in Spain is as follows:-
Client Code: 12134
Dear Mr & Mrs Laid,
Under the Spanish legislation applicable until 31 December 2006, capital gains realized in Spain by non-resident taxpayers upon a disposal of assets were taxed at a flat rate of 35% whereas those realized by residents were taxed according to a progressive scale where the assets disposed of had been owned for one year or less and at a flat rate of 15% where those assets had been owned for more than one year. Consequently, the tax liability borne by non‑residents was always greater when they disposed of their assets one year or more after the acquisition of those assets. As regards the disposal of an asset owned for one year or less, non-residents were again subject to a higher tax liability, except when the average tax rate applied to resident taxpayers reached or exceeded 35%, which was the case when income was very substantial.
The case was brought to the European Court of Justice (“ECJ”) attention (Case C-562/07). In a judgment dated October 6th, 2009 the ECJ declared that, by treating differently, until 31 December 2006, capital gains realized in Spain according to whether they were made by residents or by non-residents, the Kingdom of Spain failed to fulfill its obligations under Article 56 EC and Article 40 of the Agreement on the European Economic Area of 2 May 1992;
Under general EU legal principles, the consequence of the judgment was evident: Spain should refund the taxes paid by non residents in breach of European Union Treaty. Since the European Law does not contain any specific method to perform the refund, the ECJ case law has made clear that the refund should be made available using the standard domestic procedures set up by the country concerned (Spain).
Under the Spanish legal system, the refund of an illegal tax is not automatic, as perhaps should be. Therefore, UK citizens have been forced to reclaim the refund individually, facing the cost and delays inherent to any legal process.
For those EU citizens that were no longer within the four years legal term to reclaim the refund of the tax according to standard regulations the only legal procedure to obtain the refund was to file a reclaim for “material damages” against the Kingdom of Spain.
This reclaim was firstly brought to the Council of Ministers, who rejected the responsibility for this fact, on the grounds that the breach of the EU Treaty by the Spanish Law was not sufficiently serious, grave and of manifest character.
We appealed this decision before the Supreme Court of the Kingdom of Spain where the decisions of the Council of Ministers must be appealed.
Recently we have been notified of the judgment of the Supreme Court where this Court dismisses the reclaim of a British citizen. Is our first case and, unfortunately, there cannot be doubt that all the cases will follow the same fate.
The judgment is based on the same arguments of the Council of Ministers, i.e. that the breach of the EU Treaty by the Spanish Law was not sufficiently serious, grave and of manifest character. The main two facts that back said statement are: the long time the European Commission took to open an infringement procedure against Spain and the absence of previous rulings of the ECJ on the matter. By the way, this second argument is straightforwardly mistaken.
According to the Court, since the European Commission let time passed without doing anything and that there was not any established case law on this matter, the Spanish Parliament could not reasonably know that the Law was not in line with the European Treaty. Therefore, the breach of the Treaty was unintentional and cannot trigger an obligation to pay damages.
With all respect to our Supreme Court, we think that the judgment is mostly based on practical, financial and political reasons rather than in strictly legal arguments.
The judgment of the Supreme Court, which is the higher Court of the Kingdom, cannot be further appealed under the ordinary procedure. It represents the last word on the matter.
In theory, there is one extraordinary remedy left against a judgment of the Supreme Court, which would be an appeal before the Constitutional Court. However, these appeals can only be attempted when the Supreme Court, either in the procedure or in the final judgment, has violated the Constitutional Rights of a citizen, for example, the right to have a fair trial. For example, when the Court denies proofs or evidences or the judgment is absolutely unmotivated. But the fact that a decision is deadly wrong from the legal point of view is not itself a cause that can be alleged before the Constitutional Court. Judges can be wrong as any other human being, but this does not mean that said wrong decisions violate the Constitutional Rights of the citizens.
Litigation before the Constitutional Court is a highly complex area. It is also little rewarding since only one out of ten appeals actually succeed. Relevant and unavoidable litigation cost must be faced and five to six years are to be expected before the process comes to an end. And honestly speaking it falls beyond our legal expertise. Normally only specialized lawyers act before the Constitutional Court and these lawyers are not likely to accept a mandate based on a “no win no fee” formula (They will starve). Furthermore, although we are not experts in Constitutional litigation, our view is that this judgment has very low, if some, possibilities of success.
Nevertheless, if you decide to continue with the process, which we think would be a very bad idea, be sure that we will cooperate as much as possible with the lawyers you decide to hire for this job.
We deeply regret the outcome of the case. We have devoted our best efforts to the case. We have invested huge sums of money and time to make the case succeed. As you know our fees were linked to the outcome to the process so for us the case is also a big hit. Please accept our apologies for the result and our gratitude for your trust.
Thank you very much,
Emilio Alvarez
Lawyer and technical leader of the Capital Gains Tax Reclaim Project
I'm tempted to re-write the old song as follows-
The shame in Spain is clearly very plain......
The European Court of Justice found that this was a clear breach of the Agreement on the European Economic Area of 1992. Under EU legal principles the consequences of the judgement were that Spain should refund the difference between the tax that was paid and the tax that should have been paid.
In Spain the refunding of an illegal tax is not automatic. The Supreme Court in Spain has decided not to bother.
The full text of the letter I've received from my lawyers in Spain is as follows:-
Client Code: 12134
Dear Mr & Mrs Laid,
Under the Spanish legislation applicable until 31 December 2006, capital gains realized in Spain by non-resident taxpayers upon a disposal of assets were taxed at a flat rate of 35% whereas those realized by residents were taxed according to a progressive scale where the assets disposed of had been owned for one year or less and at a flat rate of 15% where those assets had been owned for more than one year. Consequently, the tax liability borne by non‑residents was always greater when they disposed of their assets one year or more after the acquisition of those assets. As regards the disposal of an asset owned for one year or less, non-residents were again subject to a higher tax liability, except when the average tax rate applied to resident taxpayers reached or exceeded 35%, which was the case when income was very substantial.
The case was brought to the European Court of Justice (“ECJ”) attention (Case C-562/07). In a judgment dated October 6th, 2009 the ECJ declared that, by treating differently, until 31 December 2006, capital gains realized in Spain according to whether they were made by residents or by non-residents, the Kingdom of Spain failed to fulfill its obligations under Article 56 EC and Article 40 of the Agreement on the European Economic Area of 2 May 1992;
Under general EU legal principles, the consequence of the judgment was evident: Spain should refund the taxes paid by non residents in breach of European Union Treaty. Since the European Law does not contain any specific method to perform the refund, the ECJ case law has made clear that the refund should be made available using the standard domestic procedures set up by the country concerned (Spain).
Under the Spanish legal system, the refund of an illegal tax is not automatic, as perhaps should be. Therefore, UK citizens have been forced to reclaim the refund individually, facing the cost and delays inherent to any legal process.
For those EU citizens that were no longer within the four years legal term to reclaim the refund of the tax according to standard regulations the only legal procedure to obtain the refund was to file a reclaim for “material damages” against the Kingdom of Spain.
This reclaim was firstly brought to the Council of Ministers, who rejected the responsibility for this fact, on the grounds that the breach of the EU Treaty by the Spanish Law was not sufficiently serious, grave and of manifest character.
We appealed this decision before the Supreme Court of the Kingdom of Spain where the decisions of the Council of Ministers must be appealed.
Recently we have been notified of the judgment of the Supreme Court where this Court dismisses the reclaim of a British citizen. Is our first case and, unfortunately, there cannot be doubt that all the cases will follow the same fate.
The judgment is based on the same arguments of the Council of Ministers, i.e. that the breach of the EU Treaty by the Spanish Law was not sufficiently serious, grave and of manifest character. The main two facts that back said statement are: the long time the European Commission took to open an infringement procedure against Spain and the absence of previous rulings of the ECJ on the matter. By the way, this second argument is straightforwardly mistaken.
According to the Court, since the European Commission let time passed without doing anything and that there was not any established case law on this matter, the Spanish Parliament could not reasonably know that the Law was not in line with the European Treaty. Therefore, the breach of the Treaty was unintentional and cannot trigger an obligation to pay damages.
With all respect to our Supreme Court, we think that the judgment is mostly based on practical, financial and political reasons rather than in strictly legal arguments.
The judgment of the Supreme Court, which is the higher Court of the Kingdom, cannot be further appealed under the ordinary procedure. It represents the last word on the matter.
In theory, there is one extraordinary remedy left against a judgment of the Supreme Court, which would be an appeal before the Constitutional Court. However, these appeals can only be attempted when the Supreme Court, either in the procedure or in the final judgment, has violated the Constitutional Rights of a citizen, for example, the right to have a fair trial. For example, when the Court denies proofs or evidences or the judgment is absolutely unmotivated. But the fact that a decision is deadly wrong from the legal point of view is not itself a cause that can be alleged before the Constitutional Court. Judges can be wrong as any other human being, but this does not mean that said wrong decisions violate the Constitutional Rights of the citizens.
Litigation before the Constitutional Court is a highly complex area. It is also little rewarding since only one out of ten appeals actually succeed. Relevant and unavoidable litigation cost must be faced and five to six years are to be expected before the process comes to an end. And honestly speaking it falls beyond our legal expertise. Normally only specialized lawyers act before the Constitutional Court and these lawyers are not likely to accept a mandate based on a “no win no fee” formula (They will starve). Furthermore, although we are not experts in Constitutional litigation, our view is that this judgment has very low, if some, possibilities of success.
Nevertheless, if you decide to continue with the process, which we think would be a very bad idea, be sure that we will cooperate as much as possible with the lawyers you decide to hire for this job.
We deeply regret the outcome of the case. We have devoted our best efforts to the case. We have invested huge sums of money and time to make the case succeed. As you know our fees were linked to the outcome to the process so for us the case is also a big hit. Please accept our apologies for the result and our gratitude for your trust.
Thank you very much,
Emilio Alvarez
Lawyer and technical leader of the Capital Gains Tax Reclaim Project
I'm tempted to re-write the old song as follows-
The shame in Spain is clearly very plain......
Monday 30 January 2012
Why I feel sorry for Stephen Hester
So, Stephen Hester, boss of RBS, has bowed to the political pressure and waived his right to his bonus.
No doubt there'll be plenty of politicians and tabloid 'journalists' (I use the term loosely) congratulating themselves that their combined efforts have brought about this decision.
It is a hollow 'victory'. He's an excellent CEO and will probably choose to go elsewhere (who could blame him?)- somewhere his skills will be better valued and where he'll relatively free from interference. Who will want to take his place? - there are plenty of easier jobs in banking which pay much more money (Barclays for example) so they only way to attract decent talent will be to pay considerably MORE than they've been paying Hester.
No exactly a victory for common sense, is it? Perhaps I'm naive to expect any common sense from politicians and journalists (with a few notable exceptions).
No doubt there'll be plenty of politicians and tabloid 'journalists' (I use the term loosely) congratulating themselves that their combined efforts have brought about this decision.
It is a hollow 'victory'. He's an excellent CEO and will probably choose to go elsewhere (who could blame him?)- somewhere his skills will be better valued and where he'll relatively free from interference. Who will want to take his place? - there are plenty of easier jobs in banking which pay much more money (Barclays for example) so they only way to attract decent talent will be to pay considerably MORE than they've been paying Hester.
No exactly a victory for common sense, is it? Perhaps I'm naive to expect any common sense from politicians and journalists (with a few notable exceptions).
Wednesday 11 January 2012
Hello and Welcome
Hello there!
Welcome to our new blog.
Our goal is to educate and entertain our followers with practical tips, advice, thoughts and comments on the financial world and beyond - helping you to be truly Clever With Money.
Your thoughts and comments are always welcome so feel free to express your opinion, join the debates and suggest topics that you'd like to see covered in future posts.
Thanks for reading - please sign up as a follower if you want to become Clever With Money
Steve
Welcome to our new blog.
Our goal is to educate and entertain our followers with practical tips, advice, thoughts and comments on the financial world and beyond - helping you to be truly Clever With Money.
Your thoughts and comments are always welcome so feel free to express your opinion, join the debates and suggest topics that you'd like to see covered in future posts.
Thanks for reading - please sign up as a follower if you want to become Clever With Money
Steve
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