Q & A

“ClearAlpha Capital,” hereinafter referred to as “WE”

Q: What kind of company are we?

A: ClearAlpha Capital is a New Zealand-based investment advisory firm specializing in U.S. equity strategies. With over 15 years of market expertise, we provide high-net-worth individuals and institutions with transparent, performance-driven portfolio insights and systematic risk management solutions.

Q: Do we recommend investments to our clients?

A: We only provide real-time transaction reports.

Q: Do we accept client investment funds?

A: We will never accept client investment funds in any form.

Q: The founder's investment track record.

A: Since 2010, investment activities have focused on long-term value investing in the Hong Kong stock market. Achieved a fourfold increase in capital within four to five years.
After 2019, we shifted our focus to the U.S. stock market.
Year Our Returns S&P 500 Returns

2019 -7.36% +28.9%

2020 +39.83% +16.3%

2021 +47.83% +26.9%

2022 +0.9% -18.1%

2023 +9.06% +24.3%

2024 +27.46% +23.3%

2025 +21.82% +16.39%

Q: Which markets do we invest in?

A: We focus solely on all stocks issued within the United States and regulated by the U.S. Securities and Exchange Commission.

Q: Our performance evaluation. Why do we always compare ourselves to the S&P 500 index?

A: We are committed to maximizing the appreciation of our investors' capital. The growth of the S&P 500 Index has undoubtedly been remarkable, with an annualized total return of approximately 16%, while ours stands at 19%. Our objective is to outperform the S&P 500 Index's annualized total return. Although we may underperform the index in certain years, this stems from our distinct investment philosophy and selection of investment targets. We consistently maintain a long-term perspective.

Q: Our trading practices.

A: We typically establish positions around year-end or early in the year, holding approximately 50 stocks. We constantly monitor market movements and periodically adjust positions in these stocks. Our members receive real-time email notifications regarding all position changes.

Q: If I join as a member after you've established your positions, can I still continue trading?

A: Absolutely. Our membership operates on an annual basis, meaning you'll receive services for a full calendar year. We focus on long-term, multi-stock trading. While your trading results may differ from ours during the first year, the direction of your long-term profit curve will align with ours.

Q: Why haven't I seen any profits after trading for a while, and why am I even incurring losses?

A: We understand this anxiety. It's perfectly normal. We're constantly monitoring the performance of these stocks. Unless there's a fundamental change, we won't take any action. Because we focus on the long-term performance of stocks. The market is often influenced by specific events, data points, or prevailing sentiment, leading to poor stock performance. This reflects the market's emotional nature and requires time to digest these factors. Once this process is complete, the market will ultimately reflect its true value. So all we need is patience.

Q: Do I need to monitor the market?

A: Absolutely not. On the contrary, we need you to stay away from the stock market. All you need to do is keep an eye on our emails.

Q: What should I do if I incur a loss at year-end?

A: Experiencing a certain degree of loss at year-end is a normal occurrence in the investment process, particularly during periods of market volatility or liquidity tightening. We view the occasional drawdown in the S&P 500 index during certain years as a sign of a healthy stock market. Within this investment context, we can fully achieve a drawdown that is less than the index to protect our capital.

Q: What is the cost to become a member?

A: The current membership fee is USD499.99 per year. We value every individual who aspires to achieve wealth growth and become a potential partner. Let our wealth grow together. We will increase membership fees as investment performance improves.

Q: How is the membership validity period calculated?

A: Our membership term is one year. That is, the membership period runs from August 1, 2025, to July 31, 2026. We will send you an email before your membership service expires. You can renew via the link in the email or through our website.

Q: Are membership fees refundable?

A: Once we present our list of holdings or investment portfolio via email, payment will be considered non-refundable.

Q: Can I use leverage in my investments? What is the appropriate leverage ratio?

A: The use of leverage is a rigorous exercise in risk management. Within the investment framework of ClearAlpha Capital, determining the appropriate leverage ratio should not be based on subjective intuition. Instead, we recommend a comprehensive calculation based on the following three core dimensions:

Historical Stress Testing (Based on Past Volatility Data) Your leverage ratio should first be informed by the historical volatility of the portfolio, specifically the Maximum Drawdown (Max DD) observed in previous years. For instance, if a strategy has experienced a historical peak-to-trough decline of 25%, utilizing 2x leverage would amplify that drawdown to 50%. Your chosen ratio must ensure that the account maintains a sufficient "margin of safety" during extreme market conditions to avoid forced liquidation or psychological burnout.
Balancing Risk Appetite with Expected Returns Perform a reverse calculation based on your target return versus your maximum loss tolerance. While leverage amplifies potential gains, it scales risk symmetrically and absolutely. The ideal leverage ratio should allow your portfolio to fluctuate within a "psychological comfort zone," ensuring you can remain committed to your long-term strategy.
Factoring in Financing Costs Leverage is not a free tool. It is essential to incorporate current margin rates (interest costs) into your net return model. Utilizing leverage is only economically rational when the strategy’s expected annualized Alpha (excess return) significantly outweighs the cost of borrowing.

Strategic Suggestion: For the majority of investors seeking steady growth, we recommend maintaining minimal to no leverage. The core competitive advantage in long-term investing is the ability to "stay in the game." Excessive leverage often risks transforming high-quality long-term investments into high-risk short-term speculations.

Q: As a New Zealand resident, how should I handle taxes on my U.S. stock investments?

A: For New Zealand individual investors, tax obligations on U.S. equities are primarily determined by whether the original purchase cost of your offshore investments reaches the $50,000 NZD threshold.

1. Total Cost Below $50,000 NZD (De Minimis Exemption)

If the total cost of your global offshore investments (including U.S. stocks) remains below $50,000 NZD at all times during the tax year:
Dividend Tax: You are only taxed on the dividends received.
Capital Gains Tax: New Zealand generally does not tax capital gains for "passive investors." ClearAlpha Capital’s investment approach typically aligns with that of a passive investor, focusing on long-term holdings and corporate growth rather than frequent short-term trading. Consequently, share price appreciation during the holding period is generally not subject to capital gains tax.
Foreign Tax Credits: The 15% U.S. withholding tax on dividends can usually be claimed as a credit to offset your tax liability in New Zealand.
2. Total Cost at or Above $50,000 NZD (FIF Rules Apply)
If the cost of your offshore investments reaches or exceeds $50,000 NZD at any point during the year (even if the market value later falls below this amount), the FIF (Foreign Investment Fund) rules are triggered. You must choose one of the following two methods:
FDR Method (Fair Dividend Rate): You are taxed on 5% of the portfolio's market value as of the start of the tax year.
CV Method (Comparative Value): You are taxed on your actual total return (including share price fluctuations and dividends). If the portfolio suffers an actual loss for the year, the taxable income can be recorded as zero.
Key Compliance Reminders:
Tax Year: The New Zealand tax year runs from April 1st to March 31st of the following year.
W-8BEN Form: Ensure your U.S. broker has an updated W-8BEN form on file. Under the NZ-US Double Tax Agreement, this reduces your dividend withholding tax from 30% to 15%.
Professional Advice: Because FIF calculations involve complex currency conversions (based on monthly or annual average exchange rates published by the IRD) and certain investment types may be exempt, we strongly recommend consulting a Chartered Accountant (CA) for your annual tax filing.
Disclaimer: The above content is for informational purposes only and does not constitute professional legal or accounting advice. Tax policies are subject to change according to government regulations. Please refer to the latest guidelines on the Inland Revenue (IRD) website for official information.

Q: How should a New Zealand company handle taxes on U.S. stock investments?

A: Unlike individual investors, New Zealand companies are subject to a more institutionalized tax treatment when investing in U.S. equities. Most notably, companies do not qualify for the $50,000 NZD de minimis exemption. All U.S. share assets held under a corporate name must be integrated into the tax reporting system from the very first dollar.

1. Core Tax Framework: Mandatory FIF Rules

Under New Zealand tax law, offshore investments held by corporate entities typically trigger the Foreign Investment Fund (FIF) rules directly.

No Exemption Threshold: Companies do not enjoy the $50,000 cost exemption available to individuals. Regardless of the investment amount, the portfolio must be accounted for under FIF rules.
Calculation Method Restrictions: For corporate entities, the most common calculation method is the FDR (Fair Dividend Rate). Generally, a company must recognize taxable income equal to 5% of the portfolio's market value at the start of the tax year.
Limited Access to CV Method: Unless the company meets specific criteria (such as being a non-profit or a specific type of entity), it generally does not have the same flexibility as an individual to switch between the FDR and CV methods annually.

2. Dividends and Withholding Tax

15% Tax Credit: Companies also benefit from the NZ-US Double Tax Agreement. Upon the correct filing of the W-8BEN-E (corporate version) form, U.S. dividends will be subject to a 15% withholding tax. This amount can usually be claimed as a Foreign Tax Credit to offset the New Zealand company’s income tax liability.
Imputation Credits: Offshore taxes paid by the company can, in certain circumstances, be converted into imputation credits. This is a critical component of tax planning for future dividend distributions to shareholders.

3. Corporate Income Tax Rate

Flat Tax Rate: Profits generated from U.S. stock investments (whether calculated via the 5% FDR rate or actual profit) are currently taxed at the flat New Zealand corporate tax rate of 28%.

Key Compliance Reminders:

Financial Year Alignment: A company’s tax year must align with its balance date. If the company’s financial year does not end on March 31st, be mindful of the different filing deadlines.
Currency Conversion: Companies must use IRD-approved methods (such as mid-month or actual daily rates) to convert U.S. Dollar assets and income into NZD.
Professional Audit Risk: Corporate tax filing involves balance sheet reporting and complex FIF adjustments, making it significantly more technical than individual filing.

ClearAlpha Capital’s Advice: Holding U.S. assets through a company is often driven by asset protection or long-term family wealth succession goals. Given the complexity of corporate taxation—particularly regarding FIF loss carry-forwards and Imputation Credit Accounts (ICA)—we strongly advise all members investing via a company to engage a professional Chartered Accountant (CA) to ensure annual compliance and mitigate the risk of an IRD audit.

Disclaimer: The above content is for informational purposes only and does not constitute legal or tax advice. Corporate tax environments are complex; please consult your tax advisor or refer to the latest Inland Revenue (IRD) guidelines for corporate entities.