Why are UK investors reluctant buyers of US listed shares?
We are puzzled why many UK investors appear reluctant to acquire shares in some of the best known companies in the world, preferring to delegate responsibility to some mediocre fund manager via a collective investment vehicle, which often has hundreds of holdings, many of which are also mediocre.
The US stock market’s considerable outperformance of the UK market, over virtually any long-term time period you care to mention, appears to have gone unnoticed by many UK investors.
While the FTSE100 index of leading UK shares has risen 31% in the past 10 years, the US S&P500 index is up nearly 200%. We acknowledge that these returns exclude dividend income and the UK market has always offered a higher yield, however, even factoring in dividends, that’s a still a huge outperformance.
The FTSE250 of mid capitalisation stocks, which is supposed to be a better reflection of the UK economy, has ironically generated superior returns to the 100 index, climbing over 100% over the same period, however, this is still meaningfully lower than the US. Fundamental Bespoke portfolios have benefited from some wonderful mid cap success stories with Games Workshop, the designer and manufacturer fantasy miniatures, the pick of the bunch over the past few years.
If one is seeking to achieve superior investment returns it seems logical to fish in more abundant waters and the US market is stocked with a rich variety of fantastic companies, many of which will be familiar to UK investors.
Apple, the largest listed company in the world, whose products and services are ever-present in our lives, is one of the easiest companies to analyse and understand. Why wouldn’t you buy shares in a company whose product you have become so dependent on ? Microsoft is another familiar name whose software most people use every day but which bizarrely won’t be found as a direct holding in many UK equity portfolios. We appreciate the products and financial excellence of Apple and Microsoft, both of which have been long term holdings of Fundamental Bespoke portfolios.
Our new Ultimate Stocks portfolio aims to simplify the process of investing in great global companies, some of which are listed on the UK market, but the majority on the US and other well-regulated overseas markets.
The portfolio contains 25 companies, many of which are popular with their consumers and in high demand. We’re on the hunt for quality and real organic growth which can provide excellent returns for shareholders over the long term.
Investors in our Ultimate Stocks portfolio will benefit from holding shares in some fantastic global businesses, full visibility of holdings, minimal transactions and low fees.
To find out more please contact Chris or Stephen on 01923 713890 or email [email protected]