Wealth Platform - CISI

• Platform Assets

  1. Overview

  2. Assets
• Platform Assets - Overview

  Know how a platform is structured: wrappers; assets
• Platforms

  Services designed to enable retail investors and financial advisers to manage investment portfolios
• Platform operator

  The regulated financial services firm responsible for the functionality and performance of the platform
• Range of assets supported by platforms

  Authorised collective investment schemes (CISs), types of assets trading on Regulated Markets
• Tax-efficient methods of investing

  Individual savings accounts (ISAs), pensions
• Platform structure

  Wrappers, assets
• Platform operators


  • Decide on the range of assets to be supported
• Each platform enables investors to

  Communicate via different media, choose from a wide range of CISs and assets trading on Regulated Markets, use tax allowances and tax-efficient methods of investing
• Types of assets that trade on Regulated Markets

  • Cash
  • Exchange-traded assets (such as equities)
  • CIS units/shares
  • Structured products
• Investors can make use of various tax allowances and tax-efficient methods of investing, such as ISAs and pensions
• Products designed and operated by a product provider ensure investments are not subject to certain taxes
• Tax-efficient wrappers


  Product rules wrapped around investment assets to make them tax-efficient
• General investment account (GIA)


  A product that is not tax-efficient and can be used for general investment purposes
• Platform operator's aim

  To enable the investor to perform all their investment activity via the platform's services
• Cash on the platform is not just for paying transactions but also for future transactions and platform charges
• Platform operator must consider

  If it will only handle sterling or enable the investor to hold balances in other currencies
• Platform operator may pass on interest earned on uninvested cash balances to investors
• Exchange-Traded Assets

  • Shares
  • Government bonds (e.g., gilts)
  • Exchange-traded funds (ETFs)
• Equities


  Holding shares in a company gives ownership stake with voting rights and potential for growth or losses
• Corporate and Government Bonds

  Bonds are debt instruments with fixed maturity date, issuer repays capital and pays interest (coupon rate)
• Bonds are generally considered less risky than shares if the issuer remains solvent
• Bonds are generally considered less risky than shares, providing that the issuer remains solvent
• Government bonds are regarded as being of particularly low risk
• It is unlikely that a government will default on bonds, although it has happened during turbulent regime changes or serious economic problems
• Holders of Greek government bonds had to accept losses due to the restructuring of the country's debt since 2009
• Holders of corporate bonds can face more real default risks if the issuing company becomes insolvent, resulting in greater volatility than government bonds
• List of closed-ended funds

  • Investment trusts
  • Real estate investment trusts (REITs)
  • Venture capital trusts (VCTs)
• Closed-ended funds


  The fund issues a fixed number of shares and uses the capital to build an investment portfolio, which may generate income and capital growth. The portfolio is managed by an investment manager
• The success of the investment manager running the fund's portfolio affects the level of demand to buy shares in the fund
• An increase in demand for shares in a closed-ended fund

  Increases the market price of the fund
• Real Estate Investment Trusts (REITs)


  Companies that own and operate income-producing real estate, including various types of commercial real estate
• REITs engage in financing real estate and provide a real estate investment structure similar to mutual funds for stocks
• The legislation for REITs in the UK was first enacted in the Finance Act, subsequently amended by the Corporation Tax Act 2010


  2006
• To be a UK REIT, the company must be a closed-ended investment trust, reside in the UK, be publicly listed on a stock exchange recognised by the Financial Conduct Authority (FCA), and distribute 90% of its income to its shareholders
• Venture Capital Trusts (VCTs)

  Highly tax-efficient UK closed-ended CIS designed to provide private equity capital for small expanding companies and capital gains for investors
• VCTs are listed on the London Stock Exchange (LSE) and invest in companies not listed on any Regulated Market
• Exchange-Traded Funds (ETFs) combine aspects of closed-ended funds with open-ended CISs
• ETFs assets behave as closed-ended assets but the number of shares can change daily
• ETFs are managed to generate an investment return, often replicating the performance of a market index