Are US ETFs available to buy from any UK ISAs?

SashaC

I had a look around ETFs a couple of months ago and found a handful that I'm interested in buying into, but the main thing the best ones seem to have in common is being based in the US or at least not the UK (eg VGT). I checked with Vanguard's UK branch, and they don't allow any purchase of their US ETFs, but I don't know if that's a universal policy/legal requirement? 
If it's not possible via an ISA are there any alternatives that would let me get any tax benefits on buying ETFs outside the UK? Or do I have to choose between the two?

bowlhead99

Most ETFs don't produce the key investor documents required under UK/EU law to allow them to be marketed to retail investors over here, because they are not really seeking investors from over here. For a range of legal / regulatory reasons, the big players that want European investors will (to the extent they think there's sufficient demand for a strategy) have set up equivalent ETFs listed outside the US (e.g. Europe, Latin america and Asia) and domiciled them in (e.g.) Ireland or Luxembourg, and used regulatory passports to make them available to their prospective investors from the main markets across Europe.

 So even if you're using an ISA or SIPP account for tax efficiency (to get around the fact that many US-marketed funds will not bother to be registered as reporting funds under the UK's offshore funds regime, making the tax on unwrapped investing quite punitive), it falls down when you can't sign off to say you've read the mandatory information, because it wasn't produced.  This means that you could hold a fund that you already held before the so-called 'PRIIPs' (Packaged Retail and Insurance-based Investment Products) rules came in, but would find it difficult to buy any more shares of it.

Vanguard's UK team have established a growing presence over here and their senior staff who want to make a success of that business here will have a remit to sell their UK / Irish funds to UK investors that come knocking, rather than trying to pass on the US-domiciled funds to you which haven't been packaged up to be marketed to an EU audience.  However, that doesn't necessarily mean that there are no other US funds that have the relevant marketing materials available to let them be sold in Europe (the PRIIPs is an EU invention, but the UK came up with equivalent rules to prepare for Brexit).

For tax efficiency without using an ISA, you could use a pension (a SIPP is a self invested personal pension that can hold all sorts of mainstream assets and can efficiently avoid US withholding taxes thanks to the tax treaty), but that still relies on the fund providing the relevant marketing materials that meet the criteria, and your SIPP letting you access it.

While some US investment products can look quite interesting and have a low cost base, your best bet is to stick to EU based funds where you have certainty that they are going to keep the fund compliant both in terms of the rules about its prospectus etc, and UK-reporting status. Depending on your personal tax position, as long as the fund has reporting status you may be able to do quite a bit of investing while keeping your income within the boundaries of your dividend allowance and your realised capital gains within the capital gains annual exemptions.  

So staying tax-efficient may not require an ISA, but using an ISA doesn't necessarily get you access to hard-to-get foreign-domiciled products.

SashaC

Thanks bowlhead, super useful stuff

carlrom

The majority of UCITS equivalents to US ETFs are very low volume and only trade for the first couple of hours of NYSE trading session. They are so low volume and the bid/ask spread so wide that a day can easily go by without a trade so the price can lag quite substantially. I think the PRIIP regulation in this regard is harming investors instead of protecting them. I agree there are certain esoteric ETFs created recently that warrant some health warnings but so do many stocks that can be traded without health warnings. Does anyone who to write to to highlight this?