Tax Advantages of Investing in Multi-Strategy Funds 

18 November 2024
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Investing in multi-strategy funds in the UK can offer several tax advantages:

 
  • Tax-Efficient Structures: Many multi-strategy funds in the UK are structured as tax-efficient investment vehicles, such as OEICs (Open-Ended Investment Companies) or Unit Trusts. These structures allow investors to benefit from tax-deferred growth and potentially lower tax rates on investment gains. Moreover, within a fund, it is possible to make significant asset allocation changes (e.g. reducing exposure to equities and increasing exposure to cash, bond and real assets) without triggering tax liabilities, For an individual investing directly in those assets, it would be more or less impossible to make any asset allocation changes or rebalance a portfolio without having to pay some tax. 

  • Capital Gains Tax Treatment: Investors in multi-strategy funds may be eligible for preferential tax treatment on investment gains. Capital gains tax rates in the UK are generally lower than income tax rates, providing an opportunity for investors to optimize their after-tax returns. Investors can also use their annual CGT allowance on investment gains for investments held outside a tax-free wrapper such as an ISA or SIPP.

  • Dividend Tax Allowance: Multi-strategy funds may invest in assets that generate regular dividend payments, which are subject to dividend tax in the UK. However, investors can benefit from the dividend tax allowance, which allows them to receive tax-free dividends up to a certain threshold each tax year.

  • Tax-Free Savings Accounts: In the UK, investors can take advantage of tax-free savings accounts such as ISAs (Individual Savings Accounts) or SIPPs (Self-Invested Personal Pensions) to invest in multi-strategy funds. These accounts offer tax-free growth and withdrawals, providing an additional layer of tax efficiency for investors.
     

Important Information

 

This document is marketing material. Issued and approved by Sanlam Investments which is authorised and regulated by the Financial Conduct Authority. Sanlam Investments is the trading name for Sanlam Investments UK Limited (FRN 459237), having its registered office at 27 Clements Lane, London EC4N 7AE. The UCITS Management Company has the right to terminate the arrangements made for the marketing of funds in accordance with the UCITS Directive.

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