The “deliberate deprivation of assets” rule is under the microscope in the Sunday Telegraph Money section. In particular, it is looking to warn readers that gifting money or assets can be reviewed in the cases where individuals are likely to have an illness which might require them to need care in a care home and which might therefore impact on the capital they would have available at that time.
As advisers know only too well, the very high cost of care can be a real headache for so many people. Some will look to use some of their capital to help children or grandchildren. However, the Telegraph reports that figures it has obtained show that local authorities are clawing back money if they believe that cash and other assets are being deliberately depleted to avoid funding care by invoking the deliberate deprivation of assets clause. The article makes it clear that some individuals might fall into the trap innocently – mistakenly believing that the seven year rule which applies to gifts in respect of IHT liabilities will apply to care funding too.
Over at the Financial Mail on Sunday, Jeff Prestridge is looking at the idea of buying shares before they go ‘ex-dividend’ – something which is likely to appeal to those seeking income rather than capital gains. He highlights that some of those FTSE companies set to go XD in the weeks ahead are paying attractive dividends when compared to bank or building society interest. Now then, before you shout at us – we know this is like comparing apples and pears but it’s a yardstick that DIY investors will often use. Of course, when the share goes XD the capital value will fall to reflect the distribution so overall it is status quo. There’s nothing here that your clients are likely to be questioning but if you want to check out the details you know where to go.
Also in the FMoS, the fund in focus is Merchants Trust- one of the 20 so called “dividend heroes” of investment trusts which have increased their dividends for 20 years as highlighted by the AIC. The MoS reports that Merchants has increased its dividend for the past 36 years and is on course to deliver a 37th year of increase in yield of 4.4%. With an overall yield at 5.3% which is paid quarterly, the trust is a natural home for income seekers. Commenting in the article manager Simon Gergel, who has been at the helm for 13 years, highlights some of the stock selection changes he has made over the past year. He also mentions that he sees more risk in the UK economy due to “procrastination over securing a Brexit deal”.
Over at the Sunday Times Money section, the collapse of London Capital and Finance is on the agenda, with examples of investors who are set to lose out as a result of taking out ISAs with the firm. Such reports are unlikely to come as a surprise to professional advisers. In the article, the ST reports administrators as saying that investors in the company’s products may ultimately get back as little as 20p in the £1 invested. It’s a sorry state of affairs for sure. The question of how unregulated introducers are able to promote their products via social media is also in the spotlight as the debate continues on how to protect consumers from such situations in future.
Also in the Sunday Times, and with the so called “ISA season” almost in full flow, Ian Cowie is talking generally about the value of investing in a fund where the manager has been in situ for more than 10 years as a means of achieving the best investment returns. It’s not just a whimsical thought on his part. He backs up the argument with data provided by Ben Yearsley and Darius McDermott with plenty of examples used to back this up. As Cowie concludes, “investors seeking medium to long term returns should aim to identify managers who can succeed in a marathon not a sprint.” Sounds pretty sensible to us.
Talking of “ISA season” (sorry – we hate this term too –Ed) the Sunday Times has an eight page “ISA Special” supplement. We’ll spare you the intricate details as there are no real surprises here, but topics on the agenda include cash ISAs, making regular contributions rather than lump sum investing, using a platform, lifetime ISA and peer-to-peer loan ISAs. Finally, there’s a snappily titled article “would you invest with a veteran gunslinger/”. On the same lines as Ian Cowie’s article which looks as long standing fund managers, this time it is based on research from AJ Bell which flags up the benefits to be had by investing in a fund that has had the same manager for a long time. Examples of managers in the spotlight are Job Curtis, Anthony Cross and Giles Hargreave amongst others.