# Should I sell my Quinn Life Funds because of Charges ?



## National (22 Nov 2009)

Hi Folks,

I invested approx 65000 in Quinn Life's Freeway funds back in 2007, while they have taken a battering like everyone else's funds, they are beginning to make a comeback.
Im just wondering now, when they do recover back to what I originally put in should I cash in and buy ETF's instead?
The reason I ask is because of the annual charges.  I currently have money in the China, EM, and Euro Freeways and am paying 1% - 1.5% Annually which compared to the low cost of ETF's is extremly high.
It seems like a no brainer to me.
Is there any reason why I should not do this ?

Thanks
National


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## camel (22 Nov 2009)

One disadvantage I can think of of an ETF is that you effectively can't drip feed into it because of the brokerage commissions in the same way as funds. But in your case it's a lump sum so possibly the EFT makes sense. Presumably the tax treatment is also different between the EFT and Funds, but I'm not sure of the details.


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## LDFerguson (23 Nov 2009)

As camel suggests, there's a difference in taxation betwen funds and ETFs. Your Quinn Life investment is presumably one policy so Exit Tax applies to the overall growth in the value of the policy and you can switch between funds without triggering any taxable event. ETFs are individual instruments so Capital Gains Tax would apply to each one. This difference may or many not affect you.


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## National (26 Nov 2009)

Folks,

Thanks for your replys. 
Ah, I see, Tax is an issue here, not just charges. 
I will have to have a look and see if I can work out an example and see which works out better.

Thank You
National


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## bbc (8 Mar 2010)

Hi

I'm on the same position and was wondering if you ever figured out which situation was most cost effective ?

Thanks
Bill


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## National (12 Mar 2010)

Hi BBC

Hi,

I (very) roughly worked the costs based on a growth rate of 3% per year on a 50,000 investment over 5 Years with both Quinn and an ETF.
I have used Emerging Markets for my example.




Quinn Life
Emerging Markets Freeway
Annual Charges 1.5%



|Amount|Growth|Total|Charges|Total less charges

Year 1|50000.00|1500.00|51500.00|772.50|50727.50

Year 2|50727.50|1521.83|52249.33|783.74|51465.59

Year 3|51465.59|1543.97|53009.56|795.14|52214.42

Year 4|52214.42|1566.43|53780.85|806.71|52974.14

Year 5|52974.14|1589.22| 54563.36|818.45|53744.91


Quinn Life cashed in after 5 Years   53744.91
Less Exit Tax 
26% on 3744.91  = 973.68

3744.94
  973.68
-----------
2711.23   

*Total*
*52711.23*





DBX-Trackers Emerging Markets ETF
TER .65% Annually 



|Amount|Growth|Total|Charges|Total less Charges
Year 1|50000.00|1500.00|51500.00|334.75|51165.25
Year 2|51165.25|1534.96|52700.21|342.55|52357.66
Year 3|52357.66|1570.73|53928.39|350.53|53577.86
Year 4|53577.86|1607.34|55185.20|358.7|54826.50
Year 5|54826.50|1644.80|56471.30|367.06|56104.24


DBX cashed in after 5 years    56104.24

6104.24   Profit
1270.00   Annual Exemption
---------
4834.24 x 25%  = 1208.56

4834.24
1208.56
----------
3625.78

*Total*
*53625.78*




There are two points to consider also.
1) The tax due on Dividends received per year on the ETF would also have to be paid.
2) The fact that you can add to your Quinn fund with no extra charges while buying a new ETF cost transaction charges.

All in all, I think the ETF's are better as the longer you leave your funds in the more the charges mount up, so the higher the charges, etc, etc.....

Hope this helps.

Regards
National.

ps.  If anyone sees any issues with my calculations, please point it out.


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## National (20 Mar 2010)

Hi,
Just noticed something wrong with my calculation.
On the DB-X Tracker....
this should read as follows.

DBX cashed in after 5 years 56104.24

6104.24 Profit
1270.00 Annual Exemption
---------
4834.24 x 25% Capital Gains Tax = 1208.56

4834.24
1208.56
----------
3625.78
1270.00  Exemption added back in.
----------
4895.78

*Total*
*54895.78*


So for me the ETF works out even better.

Regards
National


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## jpd (20 Mar 2010)

ETFs are not taxed as shares - they are taxed as funds and follw the sane rulues as Irish investment funds ie you can not offset the € 1,270 annual limit.


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## darag (20 Mar 2010)

Jpd is almost right.  You need to check that the ETF falls under UCITS and if it does your investment is not subject to CGT at all.  Instead you are taxed as you would be with unit funds from Quinn, Irish Life, etc.  Most ETFs domiciled in the EU are UCITS compliant so there is a simple 23% exit tax which you have to declare in your form 11.


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## dubrov (20 Mar 2010)

The analysis doesn't take into account that if a loss is made on the ETF no tax is paid while you'll still pay the full 1.5% on the Quinn fund no matter what happens.

Why botherwaiting for the fund to return to the level at which you invested in it. I'd dump it now and switch to ETFs


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## darag (20 Mar 2010)

dubrov said:


> The analysis doesn't take into account that if a loss is made on the ETF no tax is paid while you'll still pay the full 1.5% on the Quinn fund no matter what happens.
> 
> Why botherwaiting for the fund to return to the level at which you invested in it. I'd dump it now and switch to ETFs


Well it's not quite that simple - it depends on how much the investment has lost.  For the sake of argument, lets say the fund is now worth 50% of what was originally invested.  If you cash out now and buy corresponding ETFs and your investment subsequently recovers the loss, you will have to pay 23% tax on the value of the recovery.  If you leave your investment with Quinn and it recovers, you will have no tax liability.


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## dubrov (21 Mar 2010)

Good point. 

Does anyone know if you can write off losses in the Quinn Fund against gains in a subsequent ETF investment?


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## LDFerguson (21 Mar 2010)

dubrov said:


> Good point.
> 
> Does anyone know if you can write off losses in the Quinn Fund against gains in a subsequent ETF investment?


 
You can't.  Exit tax is not transferable between products.


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## ALBERT* (22 Mar 2010)

National said:


> Hi,
> Just noticed something wrong with my calculation.
> On the DB-X Tracker....
> this should read as follows.
> ...



1)Exit tax on profits on ETF and Index funds are both 28%. 
2) Dividends on etfs at taxed at 25%
3) I don't understand where this "1270.00 Annual  Exemption" comes from. Could you please elaborate.


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