Fund portfolio rebalancing & tax liabilities

S

Sarsfield

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As far as I understand, it's possible to transfer investments between funds "within the same family" without incurring CGT. Examples being Scopes or Quinn Life Freeway funds etc.

Stop me if I've got it wrong already

What defines a family of funds? Can anyone tell me if the same applies to Rabodirect funds as the funds themselves are actually operated by a number of providers.
 
One can transfer shares from one spouse to another without any SD or CGT liabilities (the receiving spouse inherits the original purchase price for CGT purposes). I'm not aware of any similar rules in relation to investment funds or with other members of one's family.
 
Sorry I meant a "family of funds". e.g. moving a portion of a Euro Freeway fund to a Celtic Freeway fund. AFAIK this can be done directly, without cashing in a portion of the fund, paying tax on the profit, and reinvesting the balance in another fund.
 
I've never heard of this. Most unit linked funds are constituted as life assurance policies in the name of the investor. I can't see how these would be transferrable to another individual. Note also that growth on most funds is not subject to CGT and all taxes are taken care of within the fund. Of course Rabo's seem to be the main exception that I know of...
 
I'm not transferring funds to another individual. I'm transferring money from one fund to another. All the funds are mine!

So if I have invested in several Rabo funds, one has outperformed and I want to move some of the gains to another Rabo fund within my investment account, do I need to pay tax on the gain I realised from the outperforming fund?

To put it another way, if I sell some units in a Rabo fund at a profit to invest in another Rabo fund, do I need to pay tax at any stage of this process?

It's the process of rebalancing a portfolio to maintain the required percentages in each element of the portfolio. Nothing else.
 
Sorry - I completely missed your point and thought that you were talking about transferring shares or funds between family members. Sorry!
 
No worries. I was running out of ways to explain myself.

So, anyone got any answers?

I will of course take formal tax advice when required, but I'd like to know the rules before choosing where to invest & deciding what steps to take & how often to keep my portfolio balanced.
 
What you are talking about is investing in a Unit Trust fund structure, the individual funds are part of an "umbrella suite" of funds so you can move within the same set of funds without causing an encashment i.e liability to exit tax at 23%. So for example you invest 10 euros in dog&bone Irish fund it makes a euro and you switch the 11 euros into dog&bone US fund this losses 50C you decide to come out of the funds. Your tax liability will be the difference between the origional investment of 10 euros and final encashment of 10.50 therefore 50 cent at 23%.

Hope this makes sence. Very tax efficient way of investing.
 
Thanks for that Taximan. Exactly what I was asking.

Now, is there a legal definition of an "umbrella suite" of funds? Do the Rabo funds constitute such an umbrella suite? There doesn't appear to be an option to move within funds. Sell & Buy seems to be the only way.
 
Sarsfield, this is a very specilist area, as an investor all you need to ask is, are these funds in the same suite ? can I switch between the funds without causing an encashment? This is a very strong selling feature of these type of funds so it would be in the persectus & brochure under Taxation. The salesperson would be pushing this strongly.

The two main banks offer these types of funds see page 10 Irish times Bus section today. AIB Select Suite, BOI Unit funds.

Beware

Entry Charges, they should be waived if any
Exit Charges,. their should be none
Liquidity, Should be able to deal once a week
Annual management fee, between 1% and 1.5%
See if you can get the TER ( Total Expense Ratio) of the Fund, usially adds another half percent on to the price of the fund.


Cheers
 
The "family of funds" generally is the unit linked funds offered by the same institution as the investment or life assurance policy is taken out with. You could not for instance move funds from a Quinn Life investment to an Irish Life investment without paying the exit tax but you could move funds (within the same policy) to another Quinn Life fund and not have a disposal event.
 
Thanks all!

Having considered the complications, the entry/exit charges, annual fees and that the Rabo funds are apparently not in the same suite, I'm not inclined to invest in them.

Quinn Direct looks a lot simpler & cheaper. Pity they don't offer a wider range of options.
 
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