Gain on Disposal of Real Property in Malaysia – Capital Receipt or Revenue Receipt?

1. Those real property owners who are looking at cashing out now will see a substantial gain upon disposal of their real property. Now the question is this: is the gain on disposal of real property a capital receipt or a revenue receipt?

2. A layman’s answer to that question would be capital receipt. Generally, Malaysia does not impose tax on capital receipts except in certain situations where the receipt arose from the disposal of real property or shares in a real property company, which is taxable under the Real Property Gains Tax 1976 (RPGTA), or where the capital receipt is treated as a revenue receipt.

3. Many of us are familiar with the RPGTA that imposes real property gains tax (RPGT) on gains arising from the disposal of real property in Malaysia or shares in a real property company. The RPGT rates vary from five per cent (5%) to thirty per cent (30%), depending on the holding period of the real property.

4. However, not many are aware that the gain on the disposal of real property in Malaysia could be treated as a revenue receipt and hence, subject to income tax under the Income Tax Act 1967 (ITA) at the prevailing individual income tax rate [i.e. up to twenty eight per cent (28%)] or corporate income tax rate [i.e. twenty four per cent (24%)]

5. Now, the next question is, under what situation will the gain on the disposal of real property be treated as a revenue receipt instead of a capital receipt.

REITs in China & Philippines

1. Singapore is currently leading the trading of REITs in Southeast Asia,as the country has established itself as a hub for these companies for two decades with over 42 listed REITs.

2. Although the Singaporean REITs market suffered an initial blow because of the effects of the Covid-19 outbreak, it has recently reopened to resume global expansion. 

3. Another Southeast Asian country with an established REIT market is Indonesia, which currently has three listed REITs. Its REIT industry is obviously still very young compared to Singapore’s, as Indonesian legislators have yet to attract more entities by offering attractive investments.

4. Although the Singaporean REITs market suffered an initial blow because of the effects of the Covid-19 outbreak, it has recently reopened to resume global expansion. Another Southeast Asian country with an established REIT market is Indonesia, which currently has three listed REITs. Its REIT industry is obviously still very young compared to Singapore’s, as Indonesian legislators have yet to attract more entities by offering attractive investments.

U.K. Pensions Survey and Report For 2018

DB PENSIONS TO PAY OUT 1/3 OF A TRILLION POUNDS BY 2021
1. Defined benefit (DB) pension schemes in the UK are set to pay out almost one-third of a trillion pounds over a three-year period for the first time ever, Mercer has predicted. 

2. The consultancy firm said the record figures between 2019 and 2021 will be due to a large number of active and deferred members transferring the value of their entitlement to another arrangement.

Survey on Defined Benefit Pension Plan & Insurer's Outlook On Investment Returns

1. A defined benefit pension plan is a type of pension plan in which an employer/sponsor promises a specified pension payment, lump-sum (or combination thereof) on retirement that is predetermined by a formula based on the employee's earnings history, tenure of service and age, rather than depending directly on individual investment returns. 

2. Traditionally, many governmental and public entities, as well as a large number of corporations, provided defined benefit plans, sometimes as a means of compensating workers in lieu of increased pay.

3. Over time, these plans may face deficits or surpluses between the money currently in their plans and the total amount of their pension obligations. Contributions may be made by the employee, the employer, or both. In many defined benefit plans the employer bears the investment risk and can benefit from surpluses.

Self-Employed and Pension Scheme

1. New research from Prudential shows that self-employed workers are heading towards a pension saving crisis as they cannot afford to save for their retirement.

Pension Funds Are World’s Largest Asset Owners

1. Pensions funds are responsible for the majority of capital held by the world’s 100 largest asset owners (AO100), placing them among a unique group of investors that are “too important to fail”.

Survey on Retirement Fund Adequacy in UK and Singapore

1. Two in five British workers aged 46 to 55 do not know how much they have saved for retirement, despite closing in on the age they can access their pensions for the first time.

2. Finding from a new study by insurance firm Aviva, which found that this age group is the most likely to not know how much they have saved in pensions.

Applying Smart Beta in Alternative Markets

1. If you construct a value fund with small stocks that kicks out initial public offerings, bankruptcies and small companies that aren’t profitable, the screening of those duds is smart beta.

2. The typical S&P 500 index fund owns all 500 stocks in the index but doesn’t invest an equal amount in each. Traditional index fund weights are determined by market capitalization. However Smart-beta indexes tilt toward value stocks that perform well over time.

3. Smart-beta ETFs are rules-based. The rules are established in advance. Using the PowerShares S&P 500 ETF (SPLV) as an example, the fund takes the 100 least volatile stocks in the broader S&P 500 index, and then every three months it rebalances by selling what no longer fits its rules-based criteria and buys what does fit. 

Strategic/Smart Beta in Investing

1. beta is a measure of a security's or portfolio's volatility in comparison to the stock market as a whole.

2. "beta" is also used as shorthand to describe getting broad stock-market exposure, typically through investments that often track the S&P 500 and other major indexes.

3. Smart beta strategies occupy a middle ground between passive and active investment approaches. Smart beta funds are similar to passive index funds in their use of a systematic, rules-based framework to create portfolios. Smart beta strategies deviate from traditional index funds by emphasizing factors that may enhance returns relative to capitalization-weighted indexes.

Passive Investing for Asset Management

1. A passive fund is composed to track its benchmark (for example a large-cap fund might be benchmarked against the S&P 500 index) without making any deviations or analytical bets. 

2. mutual fund industry seems to have realized that they face an existential threat not just to their growth but to their very existence, and many of them are responding by cutting fees and offering passive investment choices.

Active Fund Managers In a Negative market

1. Index funds will tend to underperform active managers in strongly positive and strongly negative markets.

2. The argument is based on the premise that active managers can position their portfolios to benefit from the prevailing conditions.

Hedge Funds - Part 2 - Process and Policies Due Diligence

1. Hedge funds trade securities in volumes that are a multiple of their traditional asset management counterparts. In addition, hedge funds have less regulatory oversight than traditional asset managers.

2. A sound operational due diligence (“ODD”) process can serve as an effective mechanism to mitigate the risk of investing in hedge fund frauds. 

3. Here are some detailed insights and recommendations pertaining to Due Diligence practices on hedge fund managers focusing on their policies and process.

Hedge Funds - Part 1 - Basic Risks and Due Diligence

1. Hedge funds are unregulated investment pools. They generally are more nimble and dynamic in their trading strategies than other investment funds.

2. Hedge funds are successful only if they make money in both up and down markets. To do this, they employ some creative and risky investment strategies—selling short, using leverage, trading put and call options, trading futures and investing in emerging markets. 

3. Here is some information about hedge funds and their risks CPAs can use to evaluate the suitability of this investment for their clients.

Long-Term Growth in Asset Management Industry - Part 3 - Challenges, Strategies, Issues and Conclusion

Part 3 discuss challenges, strategies, issues and conclusions for long term investing.

Long-Term Growth in Asset Management Industry - Part 2 - Money Markets & retirement Plans

Part 2 discuss the fall in money market funds and retirement provisions.

Long-Term Growth in Asset Management Industry - Part 1 - The Industry and Distribution Network

Part 1 discusses development in the asset management industry, the European industry and the distribution network.

China's Fund Managers Shift to Bonds

CHINA'S BOND MARKET
1.Chinese government has succeeded in getting funding to higher risk sectors by relaxing bond approvals.

2. Regulators began allowing unlisted companies to issue bonds on public exchanges.

3. Chinese bonds' higher yields are appealing given the lack of options in Europe or other developed bond markets.

4. Over 40% of the bonds outstanding mature in less than three years. This is in contrast to elsewhere in the world.

ARFP Risks and Concerns

To extend from previous article titled "Asset Management Opportunities in Asia". There are currently 3 investment schemes in the Asia region- CIS, ARFP and Hong Kong-China Mutual Recognition. Each with its own features and  cross-border schemes involves risks and obstacles and all schemes must avoid overlooking areas that may deter investors. Below are a few potential risks and costs of cross border investment funds as well as concerns and uncertainties. 

Asset Management Opportunities in Asia

ASIAN REGION FUNDS PASSPORT
Target Live Launch Period:-  Late 2015/ Early 2016

Participating Pilot Group Countries:- Australia, Korea, New Zealand, Philippines, Singapore and Thailand.

Subsequent potential countries still in discussions:- Hong Kong, China, Indonesia, Japan, Malaysia, Taiwan and Vietnam

Asset Management Challenges

BACKGROUND

After the financial crisis (Lehman 2008), there were substantial growth and profitability in the industry. This post will discuss the challenges & issues in the asset management industry. Below are some past performance data on AuM (Sourced from Financial Institutions and Insurance Practice Areas & BCG Global Asset Management Database)