Investing in US Stocks rather than UK Stocks

12th Feb '21 by nkingy2003

28 comments 1442 reads

Hi everyone,

I'm quite new to self investing, I've always invested in index funds until some recent research and reading of books from the likes of Joel Greenblatt have persuaded me that you can beat index funds by self investing in undervalued 'good' shares.

I'm loving Stockopedia, it makes the analysis and research of shares so much easier and quicker. I'm currently following a NAPS type stock picking system using top StockRanks. When I gain more knowledge of analysing a company I will start picking some of my own shares whilst still using the StockRanks as a guide. I really like reading the small cap report each day, it gives lots of ideas.

I currently invest in UK shares through my IG ISA account. I have a question about investing in UK shares instead of US shares. It seems most people here invest in UK shares and I would prefer to invest in the UK as I am from the UK and have a better understanding of UK companies, legislation, economic trends, etc. However, wouldn't we have more chance of making better returns by investing in US shares? I wonder how a US share NAPS based stock picking portfolio would perform (I recall reading somewhere it wouldn't have done very well).

The reason I say that is based on the returns on the respective indices. The chart below is an overlay of S&P 500, S&P 1500, FTSE 100 and FTSE All Share indices. Its clear to see that US shares have outperformed UK shares over the last 10 years and there isn't really any point in those 10 years where UK shares have outperformed US shares. So wouldn't we be better off investing in US shares, or at least a mixture of UK & US shares?

As I say, I am quite new to self investing so I am probably missing something here and I would be very happy to be put right.

Thanks,

Nigel

Unlock with Email

Unlock with Google

Already have an account?
Login here

William K

14th Feb '21

An easy way of investing in the US is via investment trusts easily available in the UK:

Tables courtesy of Hargreaves Lansdown

Baillie Gifford US Growth (Baillie Gifford Us Growth Trust (LON:USA)) has had good returns over the last 2 years:

Also consider Scottish Mortgage Investment Trust (Scottish Mortgage Investment Trust (LON:SMT)) over 5 years:

nicobos

thanks Gari, that sounds like a great return!

I’m thinking of using spread betting account to increase US exposure but not sure where to start with research on US growth stocks. What resources do you use?

gari en desti

I use lots of different sites. First I use stocko to check out the numbers and news. Then a sway of US sites including Nasdeq, tipranks, Yahho finance, cnn, Msn money, Zacks. All free. Basically when I find a company i'm interesting in I look for as much info on it as i can find. Also, what I have found very helpful are the chat channels on dumb money. It's a great group of investor from all over the world and people find really interesting stuff and do reports on the investment potential. There's also a really good euro/uk channel. What people on dumb money are looking for are things that are happening that wall st hasn't spotted yet. You can check out some you tube vids from the 3 guys that set up dumb money.

RJLZ

What are the recommended websites to use to monitor US Share daily announcements? A US equivalent to Investegate for example.

Rusty2

15th Feb '21

Not sure about us equivalent to investigate but SeekingAlpha has lots of coverage.

I see BG and SMT have approx. halved their holdings in Tesla.

Seeking Alpha you can also set up portfolios and they have live prices. It's free but if you want access to all the articles there are some restrictions unless you subscribe. US shares tend to be more regulated with quarterly reporting.

I will have a look at Tipranks and Zacks as I don't know those.

Overw8 'N Stock'

This is a question I’ve been mulling for a while. A US equivalent to the 7.15-8am alliance news headline feed via sharepad would be very useful. Does seeking alpha provide quick market news headline summaries before the US market open? Or would it have to be Bloomberg subscription?

There are news updates everyday on Seeking Alpha but too many for me, I just set up alerts on shares I’m interested in and then I get an email. Many are after the market closes so you have much more time than in the U.K.
it’s best if you have a look yourself, it’s free. Tipranks is a similar setup but also has a ranking system on each share.

Alanjames999

16th Feb '21

That graph sure puts things into perspective, I invest in UK/US/AU/CAD markets, some thoughts:

US shares are at an all time high
USD seems to be on a downward move, so currency moves should be taken into consideration.
P.Es are crazy high,

But it's always important to invest into multiple markets to diversify and expose to other currencies. US has some pretty great ETFs as well, check out some of the posts by Edmund Shing.

DamianB

I have mentioned this elsewhere. Few people are aware:

Non-US citizens are death-taxed at 40% on any non-cash US domestic assets if they die. Threshold is very low, about usd60k.

So... tell your beneficiary family members to sell your US shares asap if you die! Like, before you are cold.

Also note that some brokers wont actually buy any foreign shares in your name. They will be held in nominee ("street name"). You will still get dividends etc. But among other things, it means that the broker can rehypothecate the assets, and if the broker has credit problems... then potentially "your" assets are caught up in that. It introduces a low probability/high consequence set of credit and operational risks to your portfolio. But I emphasise LP.

The US produces more innovative highly successful companies than just about anywhere. The wealth creation opportunities are phenomenal. This will continue.

nkingy2003

That's very interesting, those are some impressive gains! I need to look more in to the best way to deal is US shares if I decide to give it a go.

sam19

17th Feb '21

I think a Rights of Survivorship account should cover you for that? This account has two account owners. If one account owner passes away, the remaining account owner succeeds to the rights of the entire account.

Berksbee

Now that is interesting - thanks for posting.

Gosh Sam & Damian - that is super interesting. I look after my Mum's accounts which has a decent sum in US shares - I think I need to investigate.

Thought I would share my experience here.

By way of background I had a legacy amount of US shares/$s having worked for a US company 20 years back. I started to manage this actively when it tanked back in 2008 and have had a stellar performance since - up nearly 10 fold from the starting point.

The advantage of the US is it is cheap to trade, low spreads and the market is open after UK working hours.

So far so good - what can possibly go wrong? Well a couple of things in my view.

1. The market is looking very toppy, that said it is being driven by a small number of shares. I've heard talk of there being a big difference between the performance of the S&P 500 and the S&P 490 so there is value but you have to be selective.

2. I would strongly recommend checking what UK based investment trusts have in their US portfolios - anything that has TESLA et al. I would avoid like the plague.

I think the Stocko value route is the way to go (even if it is not working in the US now). If you do head down the US route (I am slowly exiting/rebalancing btw) I would recommend top slicing and taking profits along the way. You can always buy back again on dips.

I see Baillie Gifford have cut their Tesla holdings substantially recently.

aflash

This may be deleted for promoting another service but the objective is to help UK investors in US markets. Due to high valuations there I use a technical candlestick chart service to decide on entry and exit points. Twice a week you can ask for the stock you have chosen on fundamental grounds to be analysed on technical ones. It is Steve Nison's mycandlecharts.com.

do you recommend any of Steve Nison's books?

19th Feb '21

Berksbee - you should have seen the face of a wealthy friend when I told him. He owns several US properties. He should have known.

Sam - I hadn't considered that. Mostly because I didn't even think of it. This is not my area of expertise!

[Not relevant to others, but I have my feet in numerous countries, and one of them treats any form of joint asset ownership as a gift to the other party, unless it is equally funded by both parties. And any gvt determined "gift" attracts significant gift tax. So joint account ownership in the US wont help my situation. Moral: I think they are out to get us!]

Investing in US Stocks rather than UK Stocks

Unlock the rest of this article with a 14 day trial

About the Author

Nkingy2003

28 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...