Friday, 17 December 2010

Globally Diversified Technology, Growth, and Hedge portfolio!!!

Had an unexpected dividend drop into my portfolio this week - wahey.
Over the last 12 months I have diversified my portfolio with 3 investments in the US. This was driven by a number of reasons:
  • diversification out of the UK
  • hedge against a weakening £
  • growth at attractive valuations
  • highly profitable, cash rich brands that set trends and drive global markets  
At times the US seems to be a self sufficient market place that sets the pace for the rest of the world. The FTSE regularly seems directionless until Wall St opens giving substance to the adage that "when Wall St sneezes, the FTSE catches a cold". 
So to my Globally Diversified Technology, Growth and Currency Hedge portfolio! (I don't think so either). The shares have been bought principally for Growth its just that the US markets seemed to have much more value in them than the FTSE.

Anyway, my investments were in:
  • Apple on the back of IPhone sales and ahead of the IPAD being announced to the world
  • Microsoft on the back of Windows 7 roll-out, and XBox Kinect
  • Cisco which provides the technology behind the mobile networks that are creaking under the weight of smart phone data traffic.
All 3 are cash rich leaders in their fields and are seemingly good value compared to UK technology companies. Funny old thing but the likes of ARM, and Imagination Technology provide technology that drives the feature sets in many of these devices but do not generate the same profits as the above and yet seem hugely more expensive on all valuation measures (I will explore these comparables another time).
On the downside, Technology companies generally don't have the same focus on dividends and of these, despite the cash piles: $11.5bn; $5.5bn; and $4.5bn respectively, only Microsoft has a dividend policy and that being 2%.
Cisco has been the underperformer following missed growth forecasts which resulted in the shares giving 15% of their value.
But, the biggest disappointment is not in the Portfolio itself but in not being able to add Google to the portfolio with its shares having surged 30% in the last couple months as I hesitated. 
I have to say that I am pleased with the way these investments have performed and look forward to further returns.

% Gain


Gains have been measured using $ thereby excluding exchange rates until such time as the investment is realised. For the record exchange rates have been slightly favourable.

Please note that: Before investing in US stocks for the first time you will need to complete and return form W8-BEN to your broker. This enables UK investors to claim exemption from paying US tax on dividends and interest from shares traded in the US, as such income will already fall under UK income tax rules. 
The shares can also be held within an ISA.


  1. Where do you trade in us shares and is the rules the same as here.

  2. Hi Trainspotter,
    you need to find a broker who deals in overseas shares (I expect most will now).
    I know that the likes of Selftrade, TD Waterhouse, and e-trade are able to.
    Before trading US shares for the first time you need to request/print off a W8-BEN form, then sign and return to your broker which "enables UK investors to claim exemption from paying US tax on dividends and interest from shares traded in the US, as such income will already fall under UK income tax rules".
    Other than that I trade them in exactly the same way as UK shares (except for selecting DJIA or Nasdaq as the market), with the same dealing charges and hold them alongside UK investments within a self select ISA.
    Your sterling monies are converted into dollars to deal (automatic) and will remain in dollars until repatriated upon selling. Some brokers show the current value in dollars others indicate what the current sterling value would be.
    US markets are open from approx 2.45pm UK time from which time you deal in real time.