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Two Steps To Get Your Investments In Shape For 2021 – Forbes

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Though 2020 saw many challenges, stock and bond markets generally saw gains despite elevated volatility. 2021 will offer no shortage of challenges too, if history is any guide, but here are two tips to get your investments in order for whatever the markets have in store in 2021.

Check Your Fees

In financial markets fees have been on a general decline over recent decades. Low-cost ETFs have made diversified investing cheaper, brokerages have cut trading fees, sometimes to zero, and certain asset managers, such as robo-advisors have bought down industry fees as well.

However, if you don’t shop around every few years, you may not see the benefits. It’s often newer products and services that carry these lower fees. If you simply stick with the same services you’re always had, then you may not benefit.

Trading in U.S. stocks is now free at many brokerages. Funds tracking most indices are available for under 0.3% a year, and often virtually zero, for popular indices such U.S. large cap stocks.

Finally, online asset management services can cost under 0.4% a year in total. Check what you are paying because there may be a better deal out there. Also, don’t be fooled by the small percentage numbers. For example if you have $200,000 invested, then cutting costs by 0.5% saves you $1,000 a year. That’s worth a bit of effort.

Check Your Allocation

The U.S. markets have been on a tear over the past decade. 2020 was another strong year for U.S. stocks with the S&P 500 looking to be up around 15% for the year.

There is no magic rule that says the U.S. is always the best place to invest. Indeed, in past decades other markets have handily beaten the U.S. The challenge is that if you’re like most investors, as U.S. stocks rise in price, so they become a bigger proportion of your portfolio. This isn’t something to keep an eye on every day, but the turn of the year, can be a good point to evaluate your portfolio. You may find that your U.S. allocation is now higher than you initially intended. If so, selling some of your U.S. exposure and moving the funds into other assets may help balance your portfolio. This can help control risk should the U.S. markets falter.

Neither checking your fees nor checking your allocation should take too much time, but they are both relatively high reward tasks when it comes to investing. If you can reduce your fees and obtain similar services, then that’s potentially a simple boost to the investment returns that you get to keep. Secondly, keeping your allocation in balance over time can help manage risk, especially if you haven’t checked your allocation in the past year. We don’t know what 2021 will hold, but it’s historically been true that keeping an eye on fees and balancing your allocation have helped manage your risk and returns over time.

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European start-ups are attracting record levels of investment – Innovation Origins

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Investments in European start-ups rose to record levels during the final three months of 2020. In the fourth quarter of last year, a total of US$14.3 billion was invested in European start-ups. This was revealed in a report brought out by KPMG.

Seventy percent growth

This figure corresponds to an increase of seventy per cent compared to the last three months of 2019. It also marks the highest quarterly increase in 2020, although the other three have also fared extremely well. Total investment in European start-ups reached US$49 billion last year, that was US$7 billion less in 2019.

However, emerging start-ups and even companies that are already generating a certain amount of turnover are struggling to raise funding.”
Karina Kuperus, KPMG

The figures highlight a number of developments. While investments were up, the number of deals made fell sharply, from around 7,500 in 2019 to just over 6,000 in 2020. “Investors have focused on technology-driven solutions and on start-ups that are highly capable of responding to the changing needs of employees and customers. This means that early-stage start-ups and even companies that are already generating some revenue experience great difficulties in securing funding,” says Karina Kuperus, a partner in KPMG’s Emerging Giants advisory group.

Late-stage start-ups are most in demand

Financiers have been particularly interested in late-stage start-ups that have a proven business model. In a number of sectors, including fintech, logistics technology and educational technology, this has led to consistently higher valuations. In general, technology, healthcare and biotechnology are popular with investors.

There is no shortage of funds. Due to the availability of a lot of ‘unused money’ among investors ( as a result of low interest rates, among other factors), there is a lot of competition. Although this is mainly concentrated on promising start-ups in their later stages. For example, during the last three months of 2020, a number of companies managed to attract more than US$100 million, including Germany’s ATAI Life Sciences (US$125 million).

Investments are also set to increase in 2021

Globally, there has also been an appetite for funding start-ups. KPMG tallies a total of US$300 billion that has been invested in start-ups around the world. That is US$18 billion more than in 2019. The tendency towards a decline in the number of deals also applies beyond Europe’s borders. By the way, the United States accounted for more than half of all global investments last year.

The volume of investments is unlikely to drop in 2021. “The pandemic has also revealed the pressing need to modernise key aspects of the existing healthcare system and to harness new technologies, such as artificial intelligence in the development of new medicines,” Kuperus stated.

More information can be found in the latest version of Venture Pulse, KPMG’s report on their research into global investments in start-ups. 

Atomico, another European tech investment company, also recently came to a similar conclusion.

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Tangerine Investment Fund Recognized for Fundata Fundgrade A+® Award – Canada NewsWire

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Tangerine has a range of investment options, including Global ETF Portfolios  

TORONTO, Jan. 22, 2021 /CNW/ – Tangerine Investments is pleased to have yet another Fundata FundGrade A+® Award under their belt, with recognition for the performance of the Tangerine Balanced Income Portfolio in 2020.

“We’re committed to helping our Clients invest their money and realize their financial goals in a simple and convenient way,” said Ramy Dimitry, Chief Revenue Officer of Tangerine Bank. “We’ve been helping Canadians invest online for more than a decade and awards like this one showcase how we are ensuring our Clients’ money is working hard for them.”

The FundGrade A+® Awards are annual awards given to Canadian investment funds that have been consistent FundGrade A-Grade performers, with around 6 per cent of investment fund products available in Canada receiving the coveted FundGrade A+® rating.  

Tangerine Investment Funds make investing easy by providing Clients with a simple, low-cost and hassle-free way to reach their long-term financial goals through an indexing strategy. 

Tangerine expands investment options with Global ETF Portfolios
To offer Clients even more options to suit their investment needs, Tangerine recently launched their Global ETF Portfolios. The new Tangerine Global ETF Portfolios bundle a selection of exchange traded funds (ETFs) in a mutual fund, offering a combination of the hands-off benefit of mutual funds with the lower cost of ETFs. Either a first-time investor or a more seasoned investor who wants to broaden their portfolio can experience a simple and convenient way to invest, with features like:

  • Low management fee: Tangerine’s low fee helps to ensure your money is working harder for you1.
  • Autopilot investing: Tangerine’s simplified features include automatic contributions, automatic rebalancing, and dividend reinvesting.
  • Globally diversified: Each portfolio invests in stocks and/or bonds from over 45 countries across the world, offering a whole lot of opportunity for growth.
  • Designed to meet your needs:  Everyone’s investment goals are different, and Tangerine will help you pick the right investment option to meet your needs.
  • Start with as little as $25: You don’t need a fortune to start investing. Get going with as little as $25. Even small amounts add up over time.
  • It takes 10 minutes or less: It should take you only 5 to 10 minutes to get started with our simple setup steps, with an option to choose from an RSP, TFSA, RIF or non-registered Account.

You can learn more information about Tangerine’s Global ETF Portfolios here, and start investing here.

More information on Tangerine Investment Funds is available at tangerine.ca/en/investing.

About the FundGrade A+ ® 
FundGrade A+® is used with permission from Fundata Canada Inc., all rights reserved. The annual FundGrade A+® Awards are presented by Fundata Canada Inc. to recognize the “best of the best” among Canadian investment funds. The FundGrade A+® calculation is supplemental to the monthly FundGrade ratings and is calculated at the end of each calendar year. The FundGrade rating system evaluates funds based on their risk-adjusted performance, measured by Sharpe Ratio, Sortino Ratio, and Information Ratio. The score for each ratio is calculated individually, covering all time periods from 2 to 10 years. The scores are then weighted equally in calculating a monthly FundGrade. The top 10% of funds earn an A Grade; the next 20% of funds earn a B Grade; the next 40% of funds earn a C Grade; the next 20% of funds receive a D Grade; and the lowest 10% of funds receive an E Grade. To be eligible, a fund must have received a FundGrade rating every month in the previous year. The FundGrade A+® uses a GPA-style calculation, where each monthly FundGrade from “A” to “E” receives a score from 4 to 0, respectively. A fund’s average score for the year determines its GPA. Any fund with a GPA of 3.5 or greater is awarded a FundGrade A+® Award. For more information, see www.FundGradeAwards.com. Although Fundata makes every effort to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Fundata. FundGrade ratings are subject to change every month.

Performance for the winning fund for the period ended December 31, 2020 is as follows:

Tangerine Balanced Income Portfolio: 8.48% (1 year), 5.74% (3 years), 4.97% (5 years), 5.34% (10 years).

Award-winning fund for 2020 is:


Fund Name

CIFSC Category

Fund count

FundGrade Start Date*





Tangerine Balanced
Income Portfolio

Canadian Fixed Income Balanced

365

1/31/2011

* The end date for the FundGrade calculation is December 31, 2020.

About Tangerine Investment Funds
Tangerine Investment Funds are managed by Tangerine Investment Management Inc. and are available only by opening an Investment Fund Account with Tangerine Investment Funds Limited. Both firms are wholly-owned subsidiaries of Tangerine Bank. Tangerine Investment Funds Limited is the principal distributor of the Tangerine Investment Funds.

About Tangerine Bank
Tangerine Bank is a digital bank that delivers simplified everyday banking to Canadians. With over 2 million Clients and close to $40 billion in total assets, it’s one of Canada’s leading digital banks. Tangerine Bank offers banking that’s flexible and accessible, products and services that are innovative, fair fees and award-winning Client service. From Savings Accounts to no-fee daily Chequing, Credit Cards, GICs, RSPs, TFSAs, Mortgages, lending products and Investment Funds through its subsidiary, Tangerine Investment Funds Limited, Tangerine Bank has the everyday banking products Canadians need. With over 1,000 employees in Canada, the bank’s presence spans its website and Mobile Banking app to its 24/7 Contact Centres and Toronto-based head office. Tangerine Bank was launched as ING DIRECT Canada in 1997. In 2012 Tangerine was acquired by Scotiabank, and operates independently as a wholly-owned subsidiary.

For more information, visit tangerine.ca.

1The Portfolio’s expenses are made up of the management fee, operating expenses (including the fixed administration fee), and trading costs. The annual management fee is 0.50% of the Portfolio’s value. The annual fixed administration fee is 0.15% of the Portfolio’s value. Because this Portfolio is new, its remaining operating expenses and trading costs are not yet available.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

SOURCE Tangerine

For further information: For media inquiries: Rebecca Webster, Corporate Communications, Tangerine Bank, [email protected]

Related Links

www.tangerine.ca/

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Taxation of investment funds – Lexology

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Introduction

Israel – known as the ‘start-up nation’ – has encouraged and attracted inbound foreign investments for many years. Investors looking to invest in Israeli companies may do so by:

  • investing directly;
  • investing in investment funds managed by others; or
  • establishing a private investment fund.

Recent years have shown an increased interest and investment activity in Israeli companies by foreign investors, several of which have formed an Israeli corporate venture capital (CVC) fund for this purpose.

Among the primary tools for encouraging inbound investments is the special tax regime for private investment funds. Over the years, the Tax Authority has issued substantial guidance and numerous private rulings under the Income Tax Ordinance, providing significant tax benefits to foreign investors and private investment funds operating in Israel.

This article outlines the income tax arrangements applicable to private investment funds operating in Israel. These arrangements are predominantly based on Income Tax Circulars 9/2018 and 10/2018, which govern the taxation of venture capital funds and private equity funds, respectively.

The special tax regime applicable to private investment funds is currently under review by the Tax Authority and the Ministry of Finance. As such, tax benefits that are available under the existing regime may be adjusted and further criteria for entitlement may be added. However, such changes are not expected to affect the existing arrangements for non-Israeli limited partners.

Criteria for beneficial tax treatment

The principal conditions for beneficial tax treatment for non-Israeli investors regarding their investments in private equity and venture capital funds are as follows:(1)

  • The fund must have at least 10 unrelated (directly or indirectly) investors.
  • Investors may not hold more than 20% of the capital of the fund, with the anchor investor able to hold up to 35% of the capital of the fund.
  • At least 30% of the investors in the fund must be non-Israeli investors.
  • Total investment commitments must be at least $10 million, of which at least $5 million must come from non-Israeli investors.
  • The fund may not invest more than 25% of its total commitments (net of management fees) in any single company.
  • The fund may not invest more than 20% of its total funds raised (after deduction of management fees) in companies whose securities are publicly traded.
  • The fund may not hold short-term cash deposits or publicly traded securities, unless they originate from:
    • monies which investors transferred in accordance with their investment commitments in the fund; or
    • the realisation of profits prior to their distribution or reinvestment.
  • The fund must invest in ‘qualifying investments’ (as defined below) in Israel in accordance with the lesser of the following alternatives:
    • at least $10 million in qualifying investments of which at least $6 million must be invested, directly or indirectly, in Israeli resident companies whose intellectual property is owned by them and/or in their non-Israeli parent companies; or
    • at least 50% of the fund’s total commitments in qualifying investments, of which at least 30% of total commitments must be invested, directly or indirectly, in Israeli resident companies whose intellectual property is owned by them and/or in their non-Israeli parent companies.
  • The fund must be managed by the general partner or by a person on its behalf. The limited partners may not take any role in identifying targets or managing the portfolio companies or in the day-to-day management of the fund and will have no voting rights in the investment committee of the fund.
  • The fund may be required to provide certain financial information to the Tax Authority.
  • Investors in the fund may be required to provide certain information to the fund or the Tax Authority in order to establish their right to enjoy the benefits of a Tax Authority ruling issued with respect to the fund.

Definitions

For purposes hereof:

  • a ‘qualifying investment’ is an investment in shares of an Israeli resident company or an Israel affiliated company whose principal activity is a qualifying activity, including venture capital investments. Investments in securities traded on the stock exchange will not be considered qualifying investments, unless the fund’s holding period of a publicly traded portfolio company is at least one year from the time of the fund’s first investment therein;
  • a ‘qualifying activity’ is the establishment or expansion of enterprises engaged in activities in Israel in the areas of industry, agriculture, tourism, transport, construction (excluding real estate), water, energy, technology, communications, computing, security, medicine, biotechnology or nanotechnology or research and development in these areas;
  • an ‘Israel affiliated company’ is a foreign company whose principal assets and/or activities, directly or indirectly, are in Israel;
  • ‘shares’ include stock options and warrants, convertible notes and convertible bridge loans which are not secured by assets other than the technology or the assets which the target company owns; and
  • ‘venture capital investments’ are qualifying investments in the high-tech sector, where at least 75% of the total investment is in consideration for the issuance of shares.

Beneficial tax arrangement

If all of the above criteria are met, the following will apply to the non-Israeli investors in the fund and in the general partner.

Tax arrangement for non-Israeli limited partners

Income derived from non-Israeli investments (ie, non-Israeli companies or non-Israeli affiliated companies) will be exempt from tax in Israel.

Income derived from venture capital investments (ie, capital gains, dividends and interest) will be exempt from tax in Israel.

Income derived from qualified investments that are not venture capital investments will be taxed as follows:

  • Income from the realisation of qualified investments will be exempt.
  • Dividend income received from the qualified investments will be taxed as follows:
    • Dividend income attributed to individual investors (including if held through a transparent entity for tax purposes in the country of residency of the individual) will be subject to tax at the rate of 15%.
    • Dividend income attributed to corporate investors will be subject to tax at the corporate income tax rate (currently 23%).
    • Notwithstanding the foregoing, foreign investors from a treaty jurisdiction may be eligible for the tax rates set out under the applicable treaty (15%),(2) subject to confirmation of tax residency and beneficial ownership by the Tax Authority
  • Interest income received from the qualified investments will be taxed as follows:
    • Interest income will be subject to tax at the regular applicable tax rates set out in the Income Tax Ordinance (individuals will be taxed at a rate of 15% to 50% depending on the nature of the interest; corporates will be taxed at 23%).
    • Notwithstanding the foregoing, non-Israeli investors from a treaty jurisdiction may be eligible for the tax rates set out under the applicable treaty (10%), subject to confirmation of tax residency and beneficial ownership by the Tax Authority.
  • Any other income (not covered above), including income from management fees received from portfolio companies, will be subject to the regular tax rates set out in the Income Tax Ordinance (up to 50% for individuals and 23% for corporates).
  • Foreign investors in the fund will not be considered tax residents of Israel and will not have filing obligations in Israel as a result of their investments in the fund.

Tax arrangement for non-Israeli fund managers

Based on the foregoing, and once the fund qualifies for tax benefits, the general partner and the managers of the fund may also be entitled to certain tax benefits. As stated above, the special tax regime applicable to private investment funds is currently under review by the Tax Authority and the Ministry of Finance. As such, tax benefits that are available under the existing regime may be adjusted and further criteria for entitlement may be added.

Taxation of carried interest

Carried interest income attributable to Israeli investments will be subject to tax at the rate of 15% in the hands of non-Israeli fund managers.

Carried interest income attributable to investments in foreign entities will not be subject to tax in Israel.

Notwithstanding the foregoing, non-Israeli general partners and fund managers from a treaty jurisdiction may be eligible for the tax rates set out under the applicable treaty, subject to confirmation of tax residency and beneficial ownership by the Tax Authority.

Taxation of management fees

Income derived from management fees will generally be subject to the regular tax rates set out in the Income Tax Ordinance (up to 50% for individuals and 23% for corporates).

Alternative tax arrangements if conditions are not met

Over the years, the Tax Authority has issued alternative tax arrangements for funds that do not meet the criteria described above, including funds:

  • that have fewer than 10 investors;
  • with commitments of less than $10 million;
  • in which the limited partners are involved in the management of the fund; and
  • in which the general partner is a substantial investor.

The following is a short description of the beneficial tax treatment available in some of these situations.

Funds that have fewer than 10 investors

Income from realisations of qualifying investments will be subject to 15% income tax in Israel.

Income from interest and dividend payments that are derived from qualifying investments will be subject to tax at the lesser of:

  • 15%; and
  • the tax rates under an applicable tax treaty.

Other income that is not derived or accrued from qualified investments will be subject to the tax rates established in the Income Tax Ordinance.

Income derived from non-Israeli companies (ie, non-Israeli or non-Israeli affiliated companies) will be exempt.

Funds with less than $10 million in commitments

A beneficial tax arrangement will be available to funds that are focused on making venture capital investments.

Income from realisations of venture capital investments will be exempt from tax in Israel.

Income from interest and dividend payments will be subject to tax at the lesser of:

  • the tax rates established in the Income Tax Ordinance; and
  • the tax rates under an applicable tax treaty.

Non-Israeli funds investing in Israel without representation in israel

Generally, such a fund will enjoy the same tax benefits as described under “Tax Arrangement for Non-Israeli Limited Partners” above.

Non-Israeli managers of the fund will be entitled to exemption from Israeli tax on their carried interest (as opposed to 15% tax on carry sourced from investments in Israel, for a fund with Israeli representation) and on their management fees.

Endnotes

(1) Limited partners holding more than 4% of the interests in a fund may not control the entities managing the fund and may not hold more than 10% of the general partner, if they wish to enjoy the tax benefits.

(2) For a percentage holding lower than 25%.

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