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US Funds Have Much To Offer

Mike Godfrey, Tax-news.com, New York

11 October 2000

UK investors who play close to home could find that investing in US funds may pay rich dividends. The US accounts for more than half the world's total stock market capitalisation and it is home to 75 per cent of the world's largest companies. It's got nine out of 10 of the largest companies and it is also the birthplace of and home to many household names, such as Intel, Microsoft and IBM.

Despite the Internet stocks crisis of earlier this year, most agree that as an investment opportunity, the US is too important to miss. The US markets are on a roll and so far fears about a severe correction have not come to pass, and further interest rates hikes appear to have been put on hold for now - which is good news for the equities market.

UK investors can take heart from the fact that there is a high rate of equity market participation among ordinary US households, showing just how popular US stock trading is. With the Internet, it is of course easier than it has ever been to invest in overseas markets and to keep track of how companies are performing. Online dealing also helps to keep the costs of investing overseas down. Good websites to start with include www.cnnfn.com, www.cbs.marketwatch.com, www.bigcharts.com and, of course, www.nasdaq.com.


For investors who prefer to invest through managed funds rather than directly into equities, there are more than 100 funds from which to choose in the UK. In addition many specialist technology and biotechnology funds are heavily invested in the US market.

At the lower risk end of the spectrum are US tracker funds. Legal & General, for example, offers a US tracker unit trust which follows the FTSE USA index. There is no initial charge and the annual management fee is 0.75 per cent.

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