Expanding your investment portfolio outside the UK

investment portfolio

Thanks to the internet and the plethora of reputable online investment management companies and brokers, it has never been easier for individuals looking to expand their portfolios to add stocks in overseas markets. Indeed, given the fact that the GDP of the UK is forecast to grow at an annual rate of around 2.3% over the next two or three years, many will be searching for regions of the world where the return on investment is forecast to be higher.

The US is expected to perform slightly better, with average rates of around 3%, while Eurozone countries are forecast to grow at a miserly 1.5% over the same period. Countries that appear significantly more promising include China and India (both on 7%) and Indonesia (6.2%). Of course, these are overall averages and there will be certain sectors of industry that enjoy faster rates of growth, while others will not perform so well.

With all this in mind, investors should be prepared to spend some time checking out not only the potential growth in an entire country or region, but also how individual business sectors within those countries and even globally, are forecast to grow. Perhaps most importantly, it is essential that investments be diversified and that a long-term view is taken; say five years minimum. It should also be borne in mind that the political landscape in some regions may be less stable than that of Europe, the UK and the USA. It is therefore important to read the international press and monitor trading platform bulletins to keep abreast of events such as upcoming elections and any signs of civil unrest, either of which may affect stock prices.

One way of reducing the amount of time required to monitor how international investments are performing and decide when to tweak portfolios is to employ the services of an investment manager or broker. Although they charge a commission, it will certainly remove much of the stress involved. While there are dozens of companies to choose from, it is advisable to opt for one with an international presence. One source well worth checking out is Crunchbase, an online database dedicated to listing businesses and individuals with an interest in start-ups. For example, Crunchbase info on Fisher Investments, a leading international investment management firm, includes details about the firm, its management structure, range of services and partners, links to associated sites, and other firm facts.

Mutual funds are also worth investigating; they have the advantage of avoiding issues with currency fluctuations and having to deal with the vagaries of foreign tax legislation. Mutual funds, which are also variously known as investment trusts, unit trusts, SICAV’s and OEIC’s, function by pooling the funds of a number of individuals who wish to invest in an agreed portfolio which is overseen and controlled by an investment manager who has an in depth knowledge of the relevant business sector and region of the world. The group of investors is responsible for paying all the costs incurred in operating and maintaining the portfolio, including expenses and any losses. Similarly, they share in any profits and other income, which is allocated in direct proportion to the amount of money each of them has put into the fund.

Some of the key benefits of investing via mutual funds are that initial input required is relatively low and when additional funds are required they tend to be lower than the initial amount. The funds are usually invested in a diverse cross-section of industries, sometimes in different countries. Individual investors are normally able to withdraw some or all of their cash within a matter of one or two weeks. To meet the varying objectives of investors there are four basic types of mutual fund; equity, fixed income, balanced and money market. There are also three areas of focus; global and country, which are both self-explanatory, and sector, covering a specific industry or company in one or more countries.

In conclusion, for anyone intent on investing in overseas markets as an individual, there is no substitute for gaining first-hand experience by researching the region and industry being considered, and subsequently spending some time actually paying it a visit. Reading books, periodicals and online articles only tells part of the story. Professional fund managers or investment specialists are local to the investor and understand how the financial legislation and tax systems work in a particular country may be an excellent option.

Mitch Finlay

Web Development Manager

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