Capital International Group
KINESIS
TRADING ACCOUNT
Our Vision The Capital International Group exists to improve lifestyles through increased prosperity Our Values We seek to achieve this through the enduring values of innovation, integrity and excellence
We are an award winning investment group with our headquarters in the Isle of Man Capital Financial Markets
Introducing Kinesis Kinesis is a specialist and bespoke service for professionals and the clients they advise, offering the ability to significantly enhance net returns from exposure to a huge range of securities, indices and managed strategies. Kinesis provides an alternative to direct investment, delivering equivalent returns with substantial additional benefits.
The Kinesis spread bet trading account can significantly enhance net returns from exposure to a range of securities, indices and managed strategies, delivering equivalent returns from the same underlying assets, but more tax-efficiently The basic mechanics are as follows: ■■ We create an Index that tracks the performance of the client’s own chosen investment or investment strategy. ■■ The client invests money and makes a bet on the performance of the specified Index. ■■ If the Index performs, we pay the client the principal plus the performance (less charges). If the portfolio does not perform, we pay the client the principal less the investment loss (and charges) – just like if they held the investments directly themselves. ■■ Capital uses the client’s original investment amount – or bet margin – to purchase the investments required to deliver the investment strategy – so the product is asset backed.
■■ The big difference is that the proceeds are free of Capital Gains Tax (CGT) and because Kinesis produces no income, thesre is no income tax. This is because this is a spread bet structure, and spread bets are free of CGT and Income Tax; based on UK tax treatment as at 1st January 2013. (Clients should note that any losses cannot be offset against other capital gains) ■■ This is different from a traditional spread bet in that there is no leverage and the assets bet against are a portfolio of traditional investments selected by the client and the adviser appropriate for the client’s investment risk profile. ■■ This is an evolution of traditional spread betting since there is no leverage involved (so clients know their maximum loss) and clients can reference essentially any asset, thereby the investment risk can be as low as the client’s risk profile.
Innovation Integrity Excellence
Kinesis Sophisticated Financial Solutions The Kinesis service provides an extremely efficient and effective method of gaining exposure to the performance of an underlying reference entity, such as a stock, unit trust, an investment portfolio or an index.
Kinesis is a new innovative concept. Whereas more traditional forms of CFDs and spread bets may be seen as high risk due primarily to high levels of gearing and their single asset structure, Kinesis couldn’t be more different:
Whatever your investment objectives or investment strategy, you can achieve the same performance through Kinesis, with many additional benefits:
■■ Typically no gearing - 100% spread bet credit required ■■ Limited losses but unlimited potential gains ■■ Ability to reference a diversified managed strategy ■■ Ability to reference lower risk instruments
■■ No tax - CGT exempt, no income tax. Critically NOT tax avoidance* ■■ No ownership - of referenced securities providing an alternative to company, trusts and life policies ■■ Low cost - no commissions or account charges ■■ Simple - no complex structures, fast and easy to trade ■■ Easily accessible - without tax consequences ■■ Flexibility - choice of strategy options, huge range of assets
Capital Financial Markets
And counterparty risk is covered too: ■■ All bets are 100% hedged with assets ■■ All contracts are provided by Capital Financial Markets Limited, a subsidiary of Capital International Limited
* Structured as a spread bet contract returns from Kinesis are free from Capital Gains Tax in the UK. In addition, no income arises from Kinesis and so are not ordinarily subject to income tax. Participants should note that losses can not be offset against other CGT gains. †† This service may not be appropriate or tax efficient for all potential participants. Participants should always seek advice from a Financial Advisor or Tax specialist to determine the suitability of any financial service to your specific circumstances.
Kinesis Product Highlights The Kinesis spread bet trading account can significantly enhance net returns from exposure to a range of securities, indices and managed strategies, delivering equivalent returns from the same underlying assets, but more tax-efficiently The Kinesis spread bet trading account offers a number of benefits to individuals and trustees: ■■ Kinesis provides exactly the same investment strategy and risk profile that the individual or trustees are exposed to – we link them to the same funds or assets that they are currently invested in. ■■ The tax benefit is that any capital growth or income from the portfolio is free from capital gains tax and income tax. ■■ Kinesis has a similar costing as other “wrappers” – e.g. SIPP, offshore bond, IHT product. ■■ 3 month rolling contract so clients still retain access and flexibility to change investments and the tax benefit is continually locked in.
The Kinesis spread bet trading account also offers a number of benefits to financial advisers: ■■ There is no requirement for the adviser to change the client’s investment strategy. ■■ There is greater earning potential than traditional structures due to innovative structure and tax efficiencies. ■■ Kinesis provides an opportunity to increase income from existing monies by placing it into a new structure. ■■ RDR friendly. ■■ Competitive differentiator in post RDR world. The Kinesis spread bet trading account also offers a number of benefits to investment managers: ■■ Retain money to manage directly under own custody. ■■ Adds value to client by giving them a taxefficient alternative. ■■ Swaps multiple retail clients for a single professional regulated client. ■■ Competitive differentiator.
In Summary ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■
Extremely tax efficient† No ownership of referenced securities Accessible Simple Flexible Low cost delivery Secure on-line platform Unrivalled strategy options Structural security
†† This service may not be appropriate or tax efficient for all potential participants. Participants should always seek advice from a Financial Advisor or Tax specialist to determine the suitability of any financial service to your specific circumstances.
Innovation Integrity Excellence
Kinesis Innovative in so many ways... Kinesis can be written against an almost unlimited spectrum of financial instruments either individually or as part of a strategy, including: ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■
Funds, collectives and investment trusts Bespoke broker strategies Your personal portfolio strategies Bespoke tracker strategies Bond strategies Currency and money market strategies Combination strategies Loan notes Private equity
As well as more traditional spread bets against: ■■ ■■ ■■ ■■ ■■
Individual equities Indices Foreign exchange Commodities Interest rates
Implementing a bespoke strategy is simple… Capital International Limited administers a wide range of Specialist Reference Indices (SRI’s) for professional advisers, investment managers and individuals. SRI’s are simply bespoke strategies that are regularly priced and can be actively managed or passive tracker strategies. Using Kinesis you can reference an SRI in exactly the same way as you would an index or individual equity.
Capital Financial Markets
Innovation Integrity Excellence
Kinesis Stands out from the crowd... As a means of generating a profit on the performance of an underlying investment instrument or strategy, the benefits of the Kinesis services are compelling indeed. The following graph compares equivalent returns after tax of many of the most widely used structures and services, relative to the equivalent Kinesis offering.* Unlike the majority of so called tax efficient structures, the Kinesis service is remarkably simple.
All too often financial products are overly complex with excessive costs and restrictive, opaque structures. Performance it seems is often relegated to the back seat, leaving customers bewildered and dissatisfied. We take the contrary view. Performance is everything. Kinesis is designed overwhelmingly to deliver performance to our customers. That means providing exceptional strategies, maximum flexibility and transparency, combined with a low cost and highly efficient structure * Assume 10% growth and 3.5% income per annum, capital gains tax at 28% and income tax at 40%
50% 45%
Kinesis Direct Portfolio
40%
Broker OEIC
35%
PPB
30% 25% 20% 15% 10% 5% 0% Year 1
Capital Financial Markets
Year 2
Year 3
Year 4
Year 5
Kinesis Performance is everything... Screen shots taken from our on-line platform highlight how you can achieve precisely the same performance through Kinesis as you can by direct investment...
Direct Investment Mr J Smith
: Valuation Summary
Holding Description
Currency
Quantity
Book Cost
Unit Movement
Value
Portfolio CCY
F/X Rate
Portfolio Value
CASH ACCOUNTS Bank Accounts Sterling Trading Account
GBP
0
0.00
1
GBP
Subtotal: SECURITIES XYZ Fund Accumulation Shares
GBP
100,000
100,000
1.25
0 125,000.00
GBP
1 Subtotal: Portfolio Total:
0.00 0.00
125,000.00 120,000.00
125,000.00 120,000.00 100,000.00
125,000.00 125,000.00
Kinesis Mr J Smith
: Valuation Summary
Holding Description
Currency
Maturity Date
Quantity
Average In Market Unit Price Price Movement
Value
Portfolio CCY
F/X Rate
Portfolio Value
CASH ACCOUNTS Bank Accounts Spread Bet GBP Credit Account
GBP
100,000
100,000.00
GBP
1
Sterling Trading Account
GBP
0
0.00
GBP
1 Subtotal:
SECURITIES Spread Betting SpreadBet - Long Position CFM XYZ Fund Jan Long
GBP
25-Jan
1,000
100p
125p
25
25,000.00
GBP
1 Subtotal: Portfolio Total:
100,000.00 0.00 100,000.00
25,000.00 25,000.00
25,000.00 25,000.00 100,000.00
125,000.00 125,000.00
...until you take the effects of tax into account...
Direct Investment
22%
Kinesis
100%
78% Net Profit Tax The above example assumes 20% capital growth and 5% income.
Innovation Integrity Excellence
Kinesis Secure Online Platform Our highly acclaimed web portal at is the culmination of several years of development aimed at providing a secure and user friendly environment allowing customers and their advisers the ability to access their accounts online 24 hours a day in order to: ■■ ■■ ■■ ■■
View account statements View valuations on open bets Manage your own strategies Transfer funds from your account
Product Background Kinesis is only available to regulated investment professionals and professional financial advisors and such customers that they may advise and introduce in accordance with Capital International’s Introducer Terms of Business and the laws and regulations to which those introducers are subject. As part of Kinesis Capital International will contract with a wholly owned subsidiary company called Capital Financial Markets Limited. Capital Financial Markets will be the counter-party to the Kinesis spread bet contract.
Capital Financial Markets
Spread Bet Counterparty
Capital Financial Markets Limited Capital House Circular Road Douglas Isle of Man IM1 1AG T : +44 (0) 1624 654230
Service Provider
Capital International Limited Capital House Circular Road Douglas Isle of Man IM1 1AG T : +44 (0) 1624 654200 info@capital-iom.com www.capital-iom.com
This document has been prepared for information purposes only and does not constitute an offer or an invitation, by or on behalf of any company within the Capital International Group of companies or any associated company, to buy or sell any security. Nor does it form a constituent part of any contract that may be entered into between us. This document is not intended for circulation to persons who would constitute a private client. Opinions constitute our judgement as of this date and are subject to change. 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. The price of a security may go down as well as up and its value may be adversely affected by currency fluctuations. The company, its clients and officers may have a position in, or engage in transactions in any of the securities mentioned.
CIG - Kinesis Brochure - V1.01-01.11
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 and Capital Financial Markets Limited are licensed by the Isle of Man Financial Supervision Commission Registered Address: Capital House, Circular Road, Douglas, Isle of Man, IM1 1AG
Capital International Group
in