US Listed and USD denominated stock in a SIPP?

HamAndCheese

I'm aware that you cannot hold USD denominated assets in an ISA. I am wondering about whether the same applies to SIPPS? What I have found online suggests this is possible but I am wary of making a costly mistake with this!

Any thoughts or experience with this?

bowlhead99

HamAndCheese said:

I'm aware that you cannot hold USD denominated assets in an ISA. I am wondering about whether the same applies to SIPPS? What I have found online suggests this is possible but I am wary of making a costly mistake with this!

Any thoughts or experience with this?

That's not true - you can't hold USD cash in an ISA (so any dollar dividends or sales proceeds would need to be converted into pounds by your broker or investment platform), but you can hold shares traded on an HMRC-recognised stock exchange anywhere in the world, priced in any currency. That covers most main markets, including the USA. 

There are a few shares traded on the US main markets which can't be held in an ISA. Shares of non-US companies which trade on the US exchanges are technically listed as an 'American Depositary Receipt' representing entitlement to an underlying ordinary share of the company, and so whether you can hold the ADR in an ISA depends on whether the underlying share itself is traded on an HMRC- recognised stock exchange.  So you could go to the New York Stock Exchange and buy the ADR for Royal Dutch Shell for your ISA (as the primary underlying share trades on the London exchange) but you could not buy ADRs of some Chinese companies that are only available as US ADRs and don't have a listing on a main exchange in (e.g.) HK or London or Europe.

I am wondering about whether the same applies to SIPPS? What I have found online suggests this is possible but I am wary of making a costly mistake with this!

The rules for ISAs about qualifying assets do not all apply to SIPPs as the ISA rules are a different set of legislation - you can generally hold US shares and ADRs without issue, as long as the stockbroker chooses to offer access to them. But some SIPP providers find it more convenient to just apply the same blanket restrictions to purchases in their SIPPs as they have for their ISAs when they are tagging a big list of potential investments as allowable or not.  So last summer for example I couldn't buy NIO (a chinese stock listed in the US via ADR) in my AJ Bell SIPP, even though the HMRC rules wouldn't have prevented it. I had to buy it in a general investment account (not tax-protected) instead.  I do however hold a variety of US, European and Asian stocks in the SIPP.

Generally your SIPP provider won't allow you to make a 'mistake' and buy a prohibited asset, as the SIPP trustee is responsible for running the pension and making sure your pension doesn't break the law, so the investment platforms simply won't sell an asset to you for your pension if it isn't allowed to be held in a pension.