UK Pensions: Tax Advantages of Flexible Drawdown for Non-Residents

If you approaching pension age and are resident in a low tax jurisdiction (Russia, for example), you could take advantage of the UK’s flexible drawdown regime from age 55. If you are non-resident for tax purposes, although you might in future return to the UK to live, or indeed to another country, you may be able to receive the full value of your fund liability to UK tax and so without deduction of tax at source. By investing the proceeds properly, you could obtain tax free growth whilst you are outside the UK and then benefit from withdrawals of 5% per annum tax free when you are back in the UK.


UK Taxation for Non-Domiciled UK Residents

There are three main tax benefits of using offshore life assurance policies when you are considered a UK tax resident, but do not maintain ‘domiciled status’ in the UK. These include tax free investments, no Capital Gains Tax, and Tax Deferred Withdrawl Allowances.

There are specific ways that HMRC calculates taxable benefits on proceeds of insurance bonds during retirement. These include Top Slicing and Time Apportioned Relief.

Using trusts can also be a benefit to transferring wealth with reduced tax implications.

sector dispersion

Sector Momentum & Relative Strength Outperformance

Relative strength-based investing performs best when there is a high level of dispersion between market leaders and laggards. Since the beginning of this year, this has been the case. Semicondutors, software, waste management and computer technology sectors are leading, while oil related stocks are lagging.

Using relative strength-based investing strategies can lead to significant long term market outperfomance compared to ‘buy and hold’ strategies.

two of three for January Indicators

January Negative Returns: What does it mean for the rest of the year?

January finished January down 0.2%. But the does not necessarily meaan the rest of the year will be. We look at the historical record to see how other years performed when January did not do well. It turns out 2 of 3 indicators often are enough to propel the markets higher.

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Seasonal Trades and Portfolio Update

Natural Gas, Energy and Copper still have to show signs of life to fulfill their usual bullish winter runs. Meanwhile, Strong US equity markets have lead to excellent returns in the model portfolios that adhere to seasonal trade stratagies. Expect some modest seasonal weakness soon, though.

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Seasonality Update: Market Leaders and 2020 Outlook

With the new year and new decade already here, the markets closed on one of the strongest years for the US equity market in the past decade.  The S&P 500 (SPX) was up nearly 29% in 2019 – the second best year in the 2010s, only 2013’s return of just over 29% beat it. All broad sectors produce gains last year, with nine out of the 11 broad sector SPDR ETFs posting gains greater than 20%. The top three sectors, using SPDR ETFs as proxies, were technology (XLK), communication services (XLC, basically a technology ETF), and financials (XLF), returning 47.90%, 29.92%, and 29.22%, respectively. Energy (XLE), on the other hand, was the worst performing sector on the year with a return of just 4.69%. Energy has now been the worst performing sector in five out of the last six years.

As we have discussed previously, 2020 is likely to produce more gains! In fact, when the S&P 500 (SPX) had gains of 20% or more, which happened in 2003, 2009, and 2013 during the last two decades, the average return in the following years (2004, 2010, and 2014) was 11%.
As we move into 2020, we want to continue to overweight portfolios to favor the areas of leadership in the market highlighted above. With that said, the commodities market deserves attention in 2020. While crude oil has gained many investors’ attention recently, which is unsurprising given the activity in Iran, gold has been the more stable trend within the commodities/alternative space recently.

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US world focus

Market Outlook: Q1 2020

With worldwide central bank rate cuts at record highs and inflated SPX valuations, Wall Street earnings estimates for Q1 2020 look excessive. This is a typical sign of last cycle bull market. Mega-caps are able to outperform and hold earnings margins, but can they continue?

We review what JP Morgan and BAML analysts have to say about the current state of the US economic landscape. Why would they make top recommendations in Energy, Small Caps, Industrials and Transportation for 2020?

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