The US managed portfolio comprises five portfolios based on how long the client has lived in the UK, which is necessary to ensure the portfolios are tax compliant from a UK and US perspective.
There are three exchange-traded fund based portfolios catering for conservative, balanced and growth risk profiles for clients who have lived in the UK for up to seven out of the last nine years. They invest in US listed ETFs as these are US tax compliant and are treated as offshore funds for US tax purposes.
Those who have lived in the UK for longer than seven out of the last nine years have two balanced portfolios to choose from, one denominated in sterling and the other denominated in US dollars.
London & Capital has catered for the needs of US clients since 1989 and says there are around 200,000 registered Americans in the UK. Changes to US tax laws have created confusion so that Americans with investments in funds through UK wrappers such as Isas, offshore bonds and Sipps vulnerable to hefty financial penalties imposed by the US authorities.
IFAs with US clients may be worried about potential liabilities relating to the investment advice given to US clients, but putting them in the US managed portfolios is a potential solution that allows the IFA to continue to look after their clients.
However, investment choice is enevitably limited due to the requirement to be US and UK tax compliant. Some clients will only be allowed to invest in the ETF portfolios but may not want to take a passive only investment approach. Others that qualify for the balanced portfolio may be looking for more choice in terms of risk profile.