An investor in TAM could be materially and adversely affected by any of the following risks:
TAM managed accounts invest predominantly in spread bets. Spread betting involves a high level of risk to your capital. Spread bets are geared (or leveraged) products. This means that, in comparison to a conventional investor, you only have to commit approximately one-fifth of the money to a particular trade to obtain the same exposure to a share as a conventional investor. As a result of gearing, it is not uncommon for the losses on a spread bet to exceed the initial capital deposited. However, this cannot happen with TAM clients. Spreadex operates TAM accounts on a ‘non-recourse’ basis, which means that, in the very unlikely event that the net asset value of your account falls below zero, neither TAM nor Spreadex will call upon you to make good the loss. As a further safeguard, TAM will place trailing stop-loss limits on all open trades.
The valuation of a TAM investor’s account depends on stock market conditions. Consequently, the value of that account will go down as well as up and investors may not receive back the full amount that they invested.
Many of the spread bets placed by TAM will be on medium-sized companies. These generally carry a higher risk profile than larger companies.
It will be some time before a client’s funds are fully invested. Only then are TAM investors likely to experience maximum returns (though they will then also be at maximum risk). TAM should therefore be regarded as a medium to long term investment rather than a short term investment.
All gains from spread betting are currently free of income or capital taxes in the UK. However, the tax treatment depends on the individual circumstances of each client and may be subject to change in the future.
In the event of a failure by our partner broker to keep client funds properly segregated as required by FCA rules, the Financial Services Compensation Scheme (FSCS) will indemnify you – but only up to a limit of £50,000 per claim.
Example 1: Your account balance stands at £200,000. If our partner broker becomes insolvent and its administrator can pay out only 75p in the £ (£150,000) of your account balance, the FSCS would make up the difference of £50,000. If your balance was, say, £210,000, you would suffer a £10,000 loss.
Example 2: Your account balance stands at £100,000. If our partner broker becomes insolvent and its administrator can pay out only 50p in the £ (50,000) of your account balance, the FSCS would make up the difference of £50,000. If your balance was, say, £110,000, you would suffer a £10,000 loss.