UK pre/post retirement strategies

[Buckminster]

I have been meaning to set this up for a while. The next post is the perfect opportunity:

 

[Buckminster]

Hey fellow Brit,

talking of moving into ARK, any thoughts on the most tax efficient way to do so? I have yet to find an ISA or pension manager that can/will include US ETFs for reasons that seem a bit weak.

"Investment products classified as a PRIIP need to provide a KID to our third party data provider in order to be added to our platform. This is the case for all US and Canadian incorporated ETFs and is outside of our control. It is unlikely for US and Canadian ETFs to provide KIDs in the near future which means they cannot be added to our platform."

In the absence of ISA or pension means of doing so I don't see a way to avoid a hefty tax bill on profits. As has been pointed out earlier such a bill is a 'nice problem to have' but I've become used to the tax free status of the ISA and, more to the point, have money locked in a pension that is looking for a more lucrative home.

@UkNorthampton

 

[15Peter20]

I emailed ARK to see if they had any interest in trying to make their products more easily available to UK investors. If I receive any useful reply I will post it here.

 

[JupiterMan]

not sure you can get ARK in these tax wrappers.

For me, I have direct TSLA holdings in pension and ISA, and also have some ishares ETF funds which do similar thematic investing and are available in UK:

Automation & Robotics (RBTX)
Digitalisation (DGIT)
Electric Vehicles & Driving Technology (ECAR)

worth consideration as part of a diversified portfolio. performance will be lower than ARK through exposure to TSLA, but for me, that is made up by my direct holding.

 

[Buckminster]

We have been discussing this on TLF at Broker recommendations for US shares - The Lemon Fool and a related thread at UK banks and brokers after Brexit - Page 4 - The Lemon Fool .

From my enquiries I don't think you will be able to get any of the ARK funds or BPTRX in the UK at all, irrespective of whether inside or outside ISA & SIPP. As the brokers say this is due to (amongst other things) the absence of a suitable KID/KIID and that in turn relates to MIFID II.

Personally I am mid-way through opening an account with Charles Shwab to access BPTRX, and (maybe, but OT for this thread, ARKG) which as you note will have to use tax-exposed trading funds rather than tax-protected ISA & SIPP funds.

(For the benefit of our US & Canadian brethren, several years ago The Motley Fool UK shut down its discussion boards. The user community set up their own substitute which runs as a free/voluntary/donation effort, much like TMC is. There is no connection whatsoever between TLF and the 'old' TMF-UK, or the ongoing TMF-USA. You will find our Tesla/Musk thread at Musk endeavours - The Lemon Fool if it interests any of you, which I think you will find fairly muted in comparison with here).

 

[UkNorthampton]

@UkNorthampton

I don't know how to invest in ARK from UK. They have discussed Europe & Japan investors.


Baillie Gifford instead? Not advice.

According to cursory look at headlines, they might be only 5% in Tesla now (in which fund?), but presumably trying to do what Ark are doing except, possibly slightly earlier stage. I don't know too much about them, so lots of youtube, web research is advised.

"Baillie Gifford first bought Tesla stock in 2012, when it traded at around $30 and today they are worth $447 per share."

Platform Matrix Individual Investors - September 2020

Individual Investors | Baillie Gifford

Again, not advice, just an alternative for someone to research. I don't have money with them.

I just thought - if you want - fill in a W8BEN for each provider (tax/deal US stocks) & follow ARK fund buys/sells directly. More work, you can only pick a subset unless it becomes a full time job. You might be able to add buy/sell orders if a watched stock goes up/down by 20% or something.

ARK funds are public knowledge. You can subscribe to their trading info.

 

[petit_bateau]

I don't know how to invest in ARK from UK. .

Per post #5 in this thread, which is a repost by Buckminster of a post by me, you will not be able to invest in ARK from a UK broker. Same goes for BPTRX.

You must open a brokerage account with e.g. a US brokerage. I am currently opening one with Charles Schwab, there are others. You should figure 2-3 weeks to get such an account operating and funded. With CS there is a minimum $25k funding requirement for such an international client as a UK-resident would be.

 

[Buckminster]

I am able to purchase ARK ETFs in my Saxo dealing a/c.

I am not able to purchase ARK ETFs in my Saxo ISA.

 

[petit_bateau]

I am able to purchase ARK ETFs in my Saxo dealing a/c.

I am not able to purchase ARK ETFs in my Saxo ISA.

That's interesting. Sounds like Saxo's MIFID compliance department is understaffed.

 

[UkNorthampton]

Per post #5 in this thread, which is a repost by Buckminster of a post by me, you will not be able to invest in ARK from a UK broker. Same goes for BPTRX.

You must open a brokerage account with e.g. a US brokerage. I am currently opening one with Charles Schwab, there are others. You should figure 2-3 weeks to get such an account operating and funded. With CS there is a minimum $25k funding requirement for such an international client as a UK-resident would be.

The only benefit to me might be margin (which involves active management to a small degree & risk), downside is effort & TAX

UK ISAs & SIPPs seem remarkably good tax-wise.

 

[petit_bateau]

The only benefit to me might be margin (which involves active management to a small degree & risk), downside is effort & TAX

UK ISAs & SIPPs seem remarkably good tax-wise.

It depends whether you want a position in Space-X. If you do, then BPTRX is 4% Space-X. Given that it is also 40% TSLA (which presumably you are fairly keen on) it means you are having to accept 55% dilution with other stuff (Vail etc) and accept the fee structure (fairly high). But that is the best route to accessing Space-X that I have been able to come up with for smallbeer UK investors. Even for us it comes with that minimum $25k funds requirement to open an account with Charles Schwab (plus their fees).

So, I get what you say about the advantages of SIPPs and ISAs, but for trading account money this Space-X exposure seems to be the best way.

 

[Johann Koeber]

Not specific for UK, but I was able to get exposure to ARK funds by investing in long CALLs in the ETF. These are available to me through IB.

I did get some ARK ETFs through Cortalconsors in Germany last year. But they called and said it was a mistake. I will not be forced to liquidate the position, but I cannot buy more. They only accept sell orders.

 

[Favguy]

The only benefit to me might be margin (which involves active management to a small degree & risk), downside is effort & TAX

UK ISAs & SIPPs seem remarkably good tax-wise.

The SIPP is great up to the lifetime allowance, after that its pretty harsh, but what can you do? I'm already at 3 times the allowance with 2 years left before I can start to vest anything and The rate above the allowance is a draconian 55%!

 

[UkNorthampton]

The SIPP is great up to the lifetime allowance, after that its pretty harsh, but what can you do? I'm already at 3 times the allowance with 2 years left before I can start to vest anything and The rate above the allowance is a draconian 55%!

For most people, SIPP might be best, but not if you have a lot of $TSLA! Having a series of small pensions that don't grow, get eaten by fees transferred to a SIPP & straight into $TSLA is something I'd like to see more people do, but cannot advise (so not advice!).

ISAs can be good as no lifetime limit/tax, especially if you had invested in also-ran (UK) companies over several years & suddenly woke up to $TSLA last year & went all in. Just saying.

 

[15Peter20]

The reply from ARK Invest. Sounds as those there’s some potential for easier access, but don’t hold your breath.


Thank you for your interest in ARK Invest!

All ARK exchange traded funds are listed on US Exchanges. Three of our actively managed ETFs (ARKF, ARKK, ARKW) are listed on the New York Stock Exchange (NYSE). The index ETFs (PRNT, IZRL) and two of our actively managed ETFs (ARKQ & ARKG) are listed on the Cboe BZX Exchange.

To invest from abroad, we recommend contacting an advisor or investment firm that has access to these exchanges. If you haven’t done so already, we invite you to download our fund prospectus, fund factsheets and performance reports here.

ARK is aware of the EU requirements. Currently, we do not have a KIID, however, we are working with outside counsel to analyze European regulation. We will update you when we’ve come to a resolution. We are sorry for the inconvenience and hope to provide more clarity to European investors in the near future.

If you’re an individual investor, please visit ark-funds.com and find out more about ARK's ETFs. Any information needed to identify ARK ETFs can be found on the ARK ETF’s respective web page: ARKF, ARKQ, ARKW, ARKG, ARKK, PRNT, IZRL.

ARK's ETFs are a great way to gain exposure to our strategies. All fund materials, including performance information, factsheets, prospectuses, etc. are available in the Investor Material section. (An investor should consult a financial professional, an attorney, or tax professional regarding the investor’s specific situation).

Our ETFs are available through various channels including broker-dealers, investment advisers, and other financial services firms, including Schwab, UBS, Morgan Stanley, Merrill Lynch, LPL, RBC, Stifel, Raymond James, Fidelity, E-Trade, Envestnet, TD Ameritrade, Ameriprise, Hightower, Pershing, Benjamin F. Edwards, Wells Fargo, Commonwealth, Robinhood, and more. (Please note that you cannot buy ARK ETFs directly through ARK Invest).

Please note ARK’s Disruptive Innovation strategy is also available in a UCITS format through our partner Nikko Asset Management.

 

[Buckminster]

So my plan was to diversify but have realised that I need to exercise my LEAPS (to minimise CGT) which will leave me 95% in TSLA stock.
If I leave my job soon, my plan is to live off my ISA (which I will diversify into high risk non TSLA stocks). This won't last long unless I average maintain 70% growth per annum.

Outstanding questions

1. How do I get more into ISAs when I don't have a surplus?
2. Should I use a wealth mgr?
3. Should I be spreading out my portfolio due to the £85k cap if Saxo go bust etc.?
4. If I move shares between accounts, will the new account maintain my profit and loss figures for future CGT calcs?
5. Anyone know who will provide a mortgage using an undiversified portfolio as collateral?

 

[petit_bateau]

So my plan was to diversify but have realised that I need to exercise my LEAPS (to minimise CGT) which will leave me 95% in TSLA stock.
If I leave my job soon, my plan is to live off my ISA (which I will diversify into high risk non TSLA stocks). This won't last long unless I average maintain 70% growth per annum.

Outstanding questions

1. How do I get more into ISAs when I don't have a surplus?
2. Should I use a wealth mgr?
3. Should I be spreading out my portfolio due to the £85k cap if Saxo go bust etc.?
4. If I move shares between accounts, will the new account maintain my profit and loss figures for future CGT calcs?
5. Anyone know who will provide a mortgage using an undiversified portfolio as collateral?

1. You can't get any more than £20k/yr into ISA. You could use SIPPs as a pathway but since these are intended for retirement you cannot withdraw pre-55.
2. General advice amongst people like us is to avoid "wealth managers" like the plague. I suggest you go to TLF (The Lemon Fool - Home) and ask for advice (i.e. thoughts of others, not advice at all ....), specifically go to Retirement Investing (inc FIRE) - The Lemon Fool as a starting point.
3. No personal opinion. General consensus is that the biggest risk is not so much losing it, rather not having access for a year or so.
4. That depends, but best to assume they will lose or mess up the data, so make a copy of everything before doing the transfer. At the end of the day it is you paying the tax to HMRC, not the broker, so you will tend to care more.
5. Not in the UK imho. The house is the collateral, your income is what they assess against the lendability criteria.
6. A minimum 70% yoy CAGR is, er, challenging. Personally I assume 5% and my mortgage is quite small.
7. Go to TLF, ask for opinions, many of us have seen it all before.

Whilst I am posting here: Charles Schwab have now confirmed they will not trade BPTRX for non-US residents. Barrons previously said otherwise and recommended Charles Schwab, but have failed to respond since I sent them the CS answer.