Buying international stock

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16th Aug '16 by Paul Flanagan

8 comments 9251 reads

Hi,

I'm looking to diversify my portfolio by buying into foreign markets. I am going to add more regions to my Stockopedia subscription.

I am wondering what are the best brokerage companies that allow me trade to trade European / American / Asian and Indian markets? I'm looking to trade individual stock rather than ETF's.

Thanks in advance for your input.

Paul

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About the Author

Paul Flanagan

Premium Member

8 comments

PhilHofGrowYourDough

16th Aug '16

Hi Paul,

The International Investor website is a good resource for this sort of information ... https://the-international-investor.com/comparison-tables/uk-international-stockbrokers

I personally use YouInvest and have my investments contained with in a SIPP and ISA's (including my wife's).

I hold UK, European, US, Australian and New Zealand investments with them.

Generally you can usually buy UK and a lot of US stocks using their online dealing service (£9.95).
With the European stocks I tend to buy smaller companies and I use have to use the telephone dealing service for these stocks (£29.95)

All international purchases/sales are subject to 1% foreign exchange.

A slight pain is the dealing service for US stocks is a bit limited time wise, e.g. market open 2.30, stop dealing at 4.30 (might be 5.30 for phone deals)

For Australasia it's a telephone limit order that is filled over night (£29.95)

On the whole I've been able to buy most of the stocks that have caught my eye and the limitations have been more about the stock itself, e.g. Drew Industries was a US stock that can't be held in a SIPP or ISA.

I hope that helps
Phil

Edward Croft

16th Aug '16

There's some useful brokerage info in our US & Asian ebooks - http://www.stockopedia.com/books/

Also a good blog here - http://www.stockopedia.com/content/is-your-stock-broker-fleecing-you-when-you-deal-in-foreign-stocks-106184/

PJ0077

17th Aug '16

Paul

The major costs in trading non-UK Equities tends to be forex charges. As Phil mentions above, he pays 100bp for each sale/purchase. Barclays charge 150bp. Which is outrageous relative to the cost of dealing commissions.

Interactive Brokers I have used for the past year & are worth a look;

their forex charges by contrast to the above are virtually zero (£1.50 per trade)
dealing commissions in Europe are 10bp
dealing commissions in the US 1bp

I haven't used them outside of Europe & the US.

As for India, I think only persons of Indian parentage can deal in these Equities (I looked into this when Stockopedia launched Indian coverage earlier this year).

Hope this helps.

jonesj

17th Aug '16

As advised by an earlier reply, BEWARE OF FOREX LOADINGS which are usually much larger than the fee for a trade of £5k.

Even something like Halifax or IWeb offer a limited number of overseas markets (main European & US). I think the IWeb forex loading is 0.5%, but do check.

TD Direct offer a slightly broader range of overseas markets, but beware of the forex loading. I stopped using them for overseas dealing when they increased the forex loading to a very greedy 2%.

I have an AJBell Sipp, which I have used for mainly British stocks (including investment trusts). My main concern with AJ Bell is their fee increases. When I started, there were dealing charges & no annual admin fee.
Increase#1: Annual fee increased from £0 to £100
Increase #2: They reworded it so there is a 0.25% custody fee for stocks of max £100 per year. And an ADDITIONAL 0.2% custody fee for funds, max £200 per year.
So customers could now be paying up to £300 a year in fees.
The FSA should look into this kind of practice. They spend all the time looking at bank accounts, which cost nothing and are easy to move. Yet, we have Sipp providers luring people in with a good deal & then hoiking it away, leaving us with a product which is very difficult to move.

As it happens, most of my overseas holdings are in investment trusts, as I do not have time to research many markets.

jjis

21st Aug '16

You don't say why you are looking to diversify internationally, if it is because you cannot find enough idea in the UK Market to fit your strategy then it may be a good idea.

If it is to avoid home market bias and because you think international markets automatically bring diversification then this may not be such a good idea. I say this because correlation between markets around the world have increased dramatically in recent years (see this article) so you may not get the benefits you expect. This does relate to indices so I accept if you are picking individual stocks in different sectors then it may still give you more diversification.

I would however, also tend to share other posters concerns about the costs and complications involved in buying and selling overseas stocks. Good luck with whatever you decide to do.

alexio

21st Aug '16

Interactive Brokers is the only way to go I think. For all other brokers you will get destroyed on the Forex commissions so badly that it probably won't be worthwhile to trade foreign stocks.

I have been using Interactive brokers for a while now, and these are the pros/cons of what they offer:

Pros:
Cheap commissions ($1 US stocks, £6 UK stocks)
No forex commission (plus you can convert at the exact underlying spot price)
Can place orders directly into the order book (thus getting better prices than through a market maker)

Cons:
No ISA account. You can get a SIPP through them through a 3rd party provider, but when I looked into it the fees were about £250/year so only worth it if you have a large account
Need to fund account with minimum £10k
You have to fund your account with a wire transfer from your bank, no way to do it with a debit card.
Data fees (think it's like £10/month for UK and US data), but you get that refunded if you do $30 worth of commission a month
They have a desktop and webpage based platform, but neither of which is particularly easy to use compared to other brokers. You will get used to it eventually though.

Overall though I would definitely recommend them. They are more of a broker for advanced investors/traders though.

Paul Flanagan

25th Aug '16

Thanks for all the feedback.

In the end I decided diversify by buying separate growth funds in India, Asia, Europe, South America and North America. This now represents around 20% of my portfolio.

The reason for my diversification was due to my portfolio being in 100% UK stocks. I think the next two years will be very volatile with Brexit on the horizon. If our currency keeps dropping my foreign funds will be worth more.

dmjram

25th Aug '16

Which funds did you go for Paul?

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Paul Flanagan

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