Expat Investments

chiang_mai

I live overseas and am no longer UK resident for tax purposes, that means I can't get onshore IFA advice so after a long period of learning I now do my own investing, But I do have an active long-standing UK bank account and an investment portfolio on City based platform, both parties know I am an expat and are OK with my status.

I'm now getting ready to build a portfolio which I'm going to post below in order to get comment and critique. Because I'm resident overseas my investment focus is perhaps different from many UK residents in that I'm happy to spread my investment risk far and wide with only 20% invested in the UK, my risk tolerance is balanced/medium and I'm near retirement age. The intended portfolio is 60/40 and valued at 50k in total and looks like this:

Bonds/Gilts
iShares £ (index-linked) Gilts UCITS ETF GBP
Fidelity Institutional (Index Linked) Bond Inc
Twenty Four AM Dynamic Bond Fund
Fidelity Money Builder (fixed interest)
Royal London Extra Yield (fixed interest)

Equities:
Baillie Gifford International
Fundsmith Equity T
Lindsell Train Global Equities.
Baillie Gifford Japanese
Baillie Gifford Managed B
Jupiter European
Lindsell Train UK Equities
Schroder Small Cap Discovery
Stewart Asia Pacific Leaders
Henderson China Opportunities

....and the geographic spread like this:

UK 22%
US 14%
EU 19%
Asia 10%
Japan 10%
India 2%
Taiwan 2%
China 9%
Aus/NZ 1%
Emerg. 6%
Other 3%

If you have any comments I'll be pleased to hear them.

AnotherJoe

Far too many investments for £50k.
As in probably 5x.

You also don't say what the aim of this portfolio is and if you'll be growing it through additional savings or will live off the income or will be spending it down over a period . No offence but £50k isn't much if it's meant to last 30 years.

greenglide

only 20% invested in the UK,

Many UK residents would consider 20% UK to be too much.

Do you intend to return to UK?

UK 22% but US 14%. Any reason?

bostonerimus

Where are you tax resident? You need to be aware of both UK and local tax issues with your investments.

IMO you have far to many funds. It looks like you've gone down the list of popular funds and bought each one. Depending on your age I'd go for a simple cap weighted world equity and bond portfolio and you can do that with just a couple of funds.

AnotherJoe

Just to add, you say your risk level is "medium" but this looks like a very risky portfolio to me, hardly offset by the bonds at all because its so risky (and plenty of people are now saying that bonds have their own risks and wont act as the buffer they used to). Just because you have 40% bonds doesn't mean that gives you free reign to make some very 'out there' punts on the 60% equity if you want to be medium risk.

Plus 22% in the UK is far too high for me, you have 14% in the worlds biggest economy (USA) and thats only 2/3 of the UK level - a bold call. Even before Brexit, do you really think its a good idea to have 50% more UK shares than USA?

If it wasnt for your presumed aversion to USA I'd say just buy VLS60 and then top up with a far east fund, that woudl match what you have planned without a lot of work going forward.

cashbackproblems

that fund list is basically HL wealth 150!


I would look at index trackers 5-6 will give you good coverage and take away the need to hold multiple funds and at a much cheaper cost. As mentioned 20% is too high in the UK if a long term portfolio, I have 0% (but a few FTSE 100 stocks). You have put 30% for example in a EM tracker covering the whole region.


Can I ask which broker you use as many do not allow expats unless you still maintain property etc in the UK.

chiang_mai

My apologies for not replying individually, let me see if I can pick up all the points in a single post:

This portfolio is spare UK cash that's doing nothing, I have separate pension and investment income including investments locally in Asia. The aim of this portfolio is simply to make unproductive funds productive.

I use Transact as my platform, I already have a drawdown pension with them and this portfolio is an extension of that portfolio - I've held a number of the above funds for a few years.

I'm light on the US because the US looks too expensive currently.

I haven't seen HL or anyone else's wealth list of funds, I use Trustnet and Morningstar plus some local resources. I've tried to select each fund based on its own merits , volatility level and geographic spread, 95% are first quartile funds.

There's only 6% in Emerging Markets, not 30%. Plus other aspects of China and Asia are covered separately.

The volatility level on all the equity funds is under 12, Morningstar X-ray rates the portfolio as the low end of Medium risk.

I'm tax resident in Thailand but offshore income is not taxable here unless remitted in the year it is earned.

The optimal number of funds for me was ten but I decided to spread it further because I'm likely to add to the amounts assigned to each fund, in the future. My existing drawdown portfolio contains eleven funds, nine of which are mentioned above.

The portfolio has been constructed using for guidance the performance of my existing drawdown portfolio, and, collective thinking from an investment forum locally, over a period of about three months. One of the key objectives used in its construction was to spread across markets globally.

cashbackproblems

sorry that should say "you could put for example 30% in EM"

chiang_mai

To add:

When I was in the UK earlier this year I gave my requirements to two separate IFA's who both came back with 40% equity portfolios of which 70% were UK centric and I'm not interested in anything like that. Locally we've been having the debate whether 20% UK is too high or not and we concluded it isn't, but there again we don't Brexit doom and gloom being thrown at us daily by our local media. Inescapably the UK is a major financial market and I/we're not convinced Brexit means that will simply dissolve as we go forward.

As for the asset allocation: it's correct to say that the bond market looks risky but not all bonds are created equal, I've been very pleased with the performance of my linkers and a Fidelity bond fund I hold during the past two weeks as NK troubles have hit the headlines and the markets, both have climbed over 9% each and more than compensated for the losses of three of my equity funds. And I/we think that inflation and interest rate increases are still some way off so there's plenty of time to switch later when the need arises.

FWIW my drawdown portfolio returned 8% after fees last year. My fees are IFA fees 0, platform fees, 0.50% whilst trading fees are negligible as long as trades are made during the same month.

bostonerimus

Does Thailand have any restrictions on the overseas funds you can own......will it tax remitted funds as capital gains and dividends or as income. The treaty states that Thailand can tax UK dividends, but as you say local law might not actually do that, but I'd advise you take a quick look at the double taxation treaty and understand how you'll do your taxes in the UK and Thailand.

I cannot agree with your investing philosophy.....particularly for a comparatively small sum like 50k.....I'd just dump it all in something like VLS100, you get global diversification in a single fund.

chiang_mai

Again, Thailand doesn't tax overseas income unless it's remitted in the year it was earned. This is a UK based portflio which will utilise the UK personal exemption limit.

Thailand doesn't have restrictions on which funds a resident foreigner can own.

I am non-resident UK for tax purposes and have been so for 15 years.

We can agree to disagree on the investment approach, the world would be a boring place if we all agreed on everything!

BTW I just looked at VLS and whilst that does provide global equity coverage, it also provides 23% coverage of UK equities but with no chance to reduce that allocation without selling the entire fund. One of the benefits of compartmentalised allocation is that a region can be sold and replaced without disturbing the remaining geography and that's attractive to me.