I've previously held Blackrock ISF and CUKX (the accumulation version of the former) in an ISA. I sold most of my holdings a few weeks ago and am wondering about what to buy when I think the market has tanked sufficiently
I've never held ANY overseas-focused investment so I would appreciate it if anybody could answer the question in the title. In the past I have been happy with FTSE-focused investments because so many companies actually do large amounts of trade overseas so you do get a lot of exposure to foreign economies anyway. But I am wondering whether a more diverse investment approach might be appropriate.
Background is that I am currently sitting in cash to the tune of
ISA: 167k
Non-ISA stock-broker: 412k
SIPP: 114k
I do have some holdings of direct shares as well (usual HYP-ish suspects), most of that in the ISA. I expect to go all-in into the market at some point, hoping to do it in such a way as to be set for life.
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Is it permitted to hold ETFs that invest in foreign shares in an ISA?
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- Lemon Quarter
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Re: Is it permitted to hold ETFs that invest in foreign shares in an ISA?
Yes you can. You want them to be GBP denominated, and UK reporting, but they need not be UK domiciled. For trackers of the S&P 500, European markets, Japan, Emerging markets etc , companies like Vanguard, Blackrock and Fidelity have ETFs that are domiciled in Ireland and Luxenbourg, but report in the UK and are quoted in Sterling. You may be able to hold more exotic things, but that should allow you to diversify enough.
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Re: Is it permitted to hold ETFs that invest in foreign shares in an ISA?
JohnB wrote:Yes you can. You want them to be GBP denominated, and UK reporting, but they need not be UK domiciled. For trackers of the S&P 500, European markets, Japan, Emerging markets etc , companies like Vanguard, Blackrock and Fidelity have ETFs that are domiciled in Ireland and Luxenbourg, but report in the UK and are quoted in Sterling. You may be able to hold more exotic things, but that should allow you to diversify enough.
That's good to know, thanks. Yes, I noticed the Irish domicile of ISF when I filled in my last tax return. Was wondering if I was gonna get something from HMRC about it but they took it is as UK fund.
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Re: Is it permitted to hold ETFs that invest in foreign shares in an ISA?
I feel dumb. Just been doing some of my own research at ishares.com and investorschronicle and if you click through to the fund descriptions they have a flag 'ISA Eligibility Yes/No'.
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- Lemon Half
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Re: Is it permitted to hold ETFs that invest in foreign shares in an ISA?
alnitak1971 wrote:I feel dumb. Just been doing some of my own research at ishares.com and investorschronicle and if you click through to the fund descriptions they have a flag 'ISA Eligibility Yes/No'.
A couple of points to note:
1. Any dividends will be received into your account in GBP. That means that the broker will do any forex conversion at their rate and deposit the funds into you in GBP. So you cannot avoid forex charges (although they are hidden from you), nor can you time the conversion.
2. You are likely to pay a certain amount of witholding tax in the foreign country. In may EU countries that is the order of 15%. You may be able to reclaim that in the UK depending on your circumstances.
regards, dspp
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Re: Is it permitted to hold ETFs that invest in foreign shares in an ISA?
If the ETFs are GBP denominated, dividends will be paid in GBP and there is no forex (outside the bowels of the fund manager). The reason lots of ETFs are domiciled in Ireland is their favourable treatment of withholding taxes. I think it halves the US tax take for example.
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Re: Is it permitted to hold ETFs that invest in foreign shares in an ISA?
JohnB wrote:If the ETFs are GBP denominated, dividends will be paid in GBP and there is no forex (outside the bowels of the fund manager).
You'd expect that but it's not always so.
E.g. Vanguard's FTSE All-World High Dividend Yield ETF (VHYL) is GBP denominated but pays out dividends in USD.
See viewtopic.php?f=26&t=14332&start=280#p279880 (don't know how many others are like that).
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