Wednesday March 10, 2010

FREQUENTLY ASKED QUESTIONS

HOW SECURE IS MY INVESTMENT? IS IT INSURED?
Government Paper backs most investments, and since the Government of Jamaica has never defaulted on its commitments, your investment is considered to be very secure. Your investment is not a deposit and as such is not insured by the Jamaica Deposit Insurance Corporation.

WHAT IS A 'REPO'? AND HOW DOES IT DIFFER FROM A CD?
A Repurchase Agreement (popularly called Repo) is a contract between two parties whereby one party sells securities to the other party for a stated price with the understanding to repurchase said security at a fixed price on a particular date in the future. The difference between the selling price and the repurchase price constitutes the income on the transaction. For example, a client may have $1,000,000.00 to invest. MF&G Asset Management Ltd. could enter into a repurchase agreement with this client by selling to the client Government of Jamaica Treasury Bills for $1,000,000.00 and simultaneously agreeing to buy back (repurchase) the Bills from the client in 30days for $1,010,000.00. Thus the income earned by the client in this transaction would be $10,000.00 or 12.16%.

A Certificate of Deposit (CD) is a certificate issued by a bank that indicates a specific sum of money has been deposited at the bank. A CD bears a maturity date and a specific interest rate. CDs are insured, up to a maximum of $300,000.00, by the Jamaica Deposit Insurance Corporation and are issued by commercial and merchant banks. MF&G Asset Management Ltd. does not offer CDs. This is a product offered by our sister company MF&G Trust & Finance.

HOW COMPETITIVE ARE THE COMPANY'S INTEREST RATES?
Very competitive; they are benchmarked to the Central Bank's Reverse Repo Rates, which generally reflect the market expectations on interest rates. In addition, our activities in the secondary repo market often allow us to offer rates above those of the Central Bank.

DO I HAVE TO PAY WITHOLDING TAX?
Under Jamaica's income tax laws, all income earned from fixed income transactions are subject to withholding tax of 25% unless exempted by the Minister of Finance. In addition, investors from countries with a double taxation treaty with Jamaica pay a lower rate. For example, United States - 12.50%; United Kingdom - 12.50%; Canada - 15.0%. Pensioners may also be granted exemptions up to a certain limit.

ARE CLIENTS' TRANSACTIONS REPORTED TO THE INCOME TAX DEPARTMENT?
Under Jamaica's banking laws, banker client relationship is confidential and as such information on individual client's accounts is not reported to the tax authorities. Taxes withheld from client's interest are paid over to the tax authorities as a global sum.

WHAT IS PRIVATE BANKING AND DOES THE COMPANY OFFER PRIVATE BANKING SERVICES?
Private Banking is a highly personalized service offered normally to clients with a high net worth with the objectives of protecting, preserving and managing one's wealth. Some of the benefits include high confidentiality of your financial affairs, earns higher interest rates, access to offshore banking facilities, minimization of inheritance taxes and have security holdings administered.

Yes, we do offer this service.

WHICH GOVERNMENT AGENCY REGULATES THE COMPANY?
The company is regulated by and subject to detailed monitoring and operational audit by the Financial Services Commission as enunciated under the Securities Act.

ARE US$ OR OTHER FOREIGN CURRENCY DENOMINATED SECURITIES OFFERED?
Yes. Our product offerings are also denominated in US$ and £ Sterling. In addition, we also provide a market for our clients in Government of Jamaica Global US$ bonds.


WHAT DO I NEED TO PROVIDE WHEN OPENING AN ACCOUNT WITH MF&G ASSET MANAGEMENT LIMITED?

Individual/Joint Accounts

Corporate Accounts


MF&G Asset Management Ltd. will provide you with our documentation, which will be needed to be signed by all account holders/signatories.

 

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