The question I currently find myself asked most frequently is: Should I sell US equities? It is a very good question, but in isolation its answer is insufficient to lead to an investment decision. Many investors agree that US equities are expensive and because of this believe the allocation should be reduced versus the strategic target. From a valuation point of view this is a good idea, as by most measures, such as the Price to Book ratio (P/B) or the Shiller Price to Earnings ratio (also called CAPE = cyclically adjusted P/E), US equities versus their own history have reached lofty valuation levels. At the same time, many investors overlook critical questions such as:
1. Should information beyond US equity
valuations be considered?
2. How can tactical asset allocation insights
like US equity valuations best be utilised in a
portfolio context?
Before we address each of these questions, let’s revisit the basic facts on asset allocation. Asset allocation is broadly understood as the exercise of allocating between different asset classes, such as bonds versus equities, and different market segments, such as UK bonds versus Eurobonds. Holding any asset allocation for a long period is called Strategic Asset Allocation (SAA). SAA has a huge impact on the return outcome as well as the return variability, also known as volatility. A famous study by Brinson, Hood and Beebower(1) examines determinants of portfolio performance and its volatility. The key point to take away is that SAA on average determines over 90% of the return volatility. This is demonstrated in the following graph.
Corresponding results have since been confirmed by similar studies as Brinson et al(2). A study by Ibbotson and Kaplan into the impact of SAA on the return level(3), shows that empirically SAA was on average responsible for 100% of the return level outcome.
Nowadays more and more investors focus their investment efforts on SAA and implement it with cheap, passive index tracking products. That is a very good starting point but should investors stop there?
Both market timing and security selection represent active investment management. Market timing represents short term, Tactical Asset Allocation (TAA) decisions, like temporarily underweighting US equities versus the strategic US equity allocation. Security selection keeps the strategic US equity allocation but varies the weights of individual US stocks within the allocation to US equities.
TAA is traditionally implemented by tilting portfolios away from strategic weights during any year. This creates relative risk (tracking error) but also potential outperformance (excess return) versus the SAA portfolio. The relationship of both variables, excess return over tracking error, is measured by the information ratio, and the aim of TAA is for the information ratio to be positive. A 10% underweight creates a much higher tracking error than a 2% underweight but if the same good idea is applied (the same information ratio), there is potential for higher outperformance. Therefore, investors are required to have a very clear idea about how much tracking error they can withstand when
markets don’t behave as predicted and that TAA generates significant underperformance versus a pure SAA portfolio.
Sizing an under- or overweight portfolio can have further implications on the absolute level of risk. For example, if an investor doesn’t like bonds versus equities because of low yield, should they reduce bonds from 50% strategically to 25% tactically? Alternatively, should the investor go all the way and not allocate to bonds at all; in other words switch to 100% equity? The latter will cause a far less diversified and much riskier portfolio. The following graph shows a 50/50 combination of two hypothetical assets, which both have a Sharpe ratio of 0.5 and a volatility of 10%(4): It illustrates a Sharpe ratio deterioration for tilting or switching, which is also larger for portfolios with more diversified assets or strategies (Fig. 2 lower correlations, left).
Therefore, a portfolio including TAA faces an uphill battle just to match the Sharpe Ratio investors would expect from it if no TAA would be attempted.
Let’s now look at using valuations in TAA decision making. In my opinion it is an absolute necessity to consider valuations. However, looking only at valuations can be equally as disastrous. For instance, some of you may remember the ‘TMT bubble’ at the turn of the century.
The below graph displays the Shiller P/E for US equities for the period of January 1881 to November 20175. In December 1995 US equities reached a Shiller P/E level over 25, well above the average level of about 15, which any investor could have calculated from all the data history between 1881 and 1995. 25 was also a level achieved only twice before in a period longer than 100 years. (Fig. 3, below)
Unsurprisingly in 1995 some investors believed that US equities were expensive and therefore started reducing their allocations to US equities. Unfortunately, in the following four years these investors had to experience significant performance headwind as valuation levels climbed even further!
After reading all of this, how excited are you about TAA? Most likely not a great deal. Nonetheless, I suggest to pursue it but in a very different, modern way that until now has predominantly been utilised by sophisticated, institutional investors. It involves the following: (Fig. 4).
Modern TAA combines many characteristics that all serve the main objective: to create positive risk-adjusted returns in most market environments. Firstly, modern TAA strategies are much more diversified. Gone are the days where a manager just shifts money between a few major equity markets or simply allocates between US equities, US bonds and US cash. Nowadays, TAA strategies explore global equity markets in much greater detail as they trade on country or regional equity indices from around the world, including liquid emerging markets. In bonds, futures on different parts of a yield curve are traded. Some strategies even explore credit spreads. Modern TAA strategies additionally allocate between different commodities, from energy contracts to agricultural, precious and industrial metals. They also pursue investment decisions between currency pairs, sometimes including currencies from emerging market countries. Some TAA strategies even trade volatility. In summary, modern TAA strategies have many options in which to invest.
Fig. 4:
Traditional
Modern
Long-only
Long/short
Unleveraged
Leveraged
Physical Implementation
Derivative Implementation
Valuation-driven
Multi-factor
Main Developed Markets
Includes Emerging Markets
Cash/Sovereign Bonds/Equity
Includes Currencie & Commodoties
All these investments are pursued using derivatives. What sounds scary to an investor who has little or no experience with derivatives, is music to the ears of sophisticated, institutional investors around
the world. Most of those derivatives have been used by investors for decades and many of them are standardised instruments traded on exchanges. They bring substantial cost advantages, as liquidity in most derivatives is very deep, sometimes even deeper than the physical market they are linked to. The crucial advantage here is that trading costs are relatively low, which in turn allows a manager to trade more frequently. Derivative usage also allows TAA investors to ‘short’ a market. This means that if the investment thesis is that the price will fall, establishing a short position makes it possible to turn such an idea into a profitable strategy. With shorting you can therefore significantly increase the number of ideas a manager can implement.
Now let’s talk about leverage. While leverage can often be a polarising topic, we believe there is a strong case for allowing it to achieve superior risk management. If an investor wants to have a noticeable impact on overall portfolio returns, modern TAA strategies would need very significant portfolio allocations, if those strategies would only target a small amount of risk. However, if modern TAA strategies can target a high
amount of risk, investors allocating to them achieve a much greater degree of capital efficiency, as they can make much smaller allocations and nonetheless achieve the desired level of risk-adjusted return impact. Without leverage, that desired high level of risk could only be achieved by taking on much more equity risk than let’s say interest rate risk. With leverage, however, this objective can also be achieved but with exposing the portfolio to a high concentration of equity risk. Instead, modern TAA strategies can balance out the different risks they decide to hold in their portfolios.
Lastly, modern TAA strategies don’t focus all their attention on valuations any longer. Instead, they are multi-factor strategies that also seek to benefit from momentum, quality and/or low risk as well as carry concepts.
Below an explanation for each idea:
• Value – The tendency for relatively cheap
assets to outperform relatively expensive ones
• Momentum – The tendency for an asset’s recent relative performance to continue in
the future
• Carry – The tendency for higher-yielding
assets to provide higher returns than lower-
yield assets
• Quality, Low Volatility – The tendency
for lower risk and higher-quality assets to generate higher risk-adjusted returns than high risk and low quality assets.
Going into more detail on each of these may be a topic for future articles. At this stage, it is critical to understand that a multi-factor approach is introducing an additional layer of diversification beyond the typical asset class dimension. This makes the return stream from modern TAA strategies even more robust.
Modern TAA strategies are a real improvement versus TAA strategies most people so far have had experience with. Still, no investment strategy can claim to be the ‘Holy Grail’ of investing as each strategy will undoubtedly have patches of negative performance and what is ‘state of the art’ knowledge today might not be tomorrow - modern TAA strategies are no exception. At this stage, however, I am confident that some of these institutional style, sophisticated strategies stand a decent chance to improve the odds of long-term positive returns of investors.
Sources
1 Brinson, G., Hood, R., and Beebower, G., (1986) “Determi- nants of Portfolio Performance”, Financial Analysts Journal, vol. 42, No. 4, pp 39-44.
2 Brinson, G., Singer, B., and Beebower G., (1991) “Determi- nants of Portfolio Performance II: An Update”, Financial Analyst Journal, vol. 47, No. 3, pp 40-48
3 Ibbotson, R., Kaplan, P., (2000) “Does Asset Allocation Policy Explain 40, 90, or 100 Percent of Performance?”, Financial Analysts Journal, Vol. 56, No. 1:26-33
All expressions of opinion are subject to change without notice and are not intended to be a guarantee of future events. This article is for information purposes only and does not constitute a solicitation to buy or sell securities nor does it purport to be a complete description of our investment policy, markets or any securities referred to in the material. Opinions expressed herein are not intended to be a forecast of future events or a guarantee of future results or investment advice and are subject to change without notice or based on market and other conditions. Any reference to model portfolios, which is used for internal purposes, is purely illustrative. The value of investments and the income from them may fluctuate and can fall as well as rise. Past performance is not a guarantee of future results. You may not recover what you invest.
Although information in this document has been obtained from sources believed to be reliable, MASECO LLP does not guarantee its accuracy or completeness and accepts no liability for any direct or consequential losses arising from its use. Throughout this publication where charts indicate that a third party (parties) is the source, please note that the source references the raw data received from such parties.
MASECO LLP do not provide tax or legal advice and levels and bases of taxation can change.
Investments or investment services referred to may not be suitable for all recipients.
In the UK, certain services are available through MASECO LLP (trading as MASECO Private Wealth and MASECO Institutional) which is registered in England and Wales, number OC337650, with registered offices at Burleigh House, 357 Strand, London, WC2R 0HS, telephone +44 (0)20 7043 0455, email enquiries@masecopw.com.
MASECO LLP is authorised and regulated by the Financial Conduct Authority for the conduct of investment business in the UK. The Financial Conduct Authority does not regulate tax advice or offshore investments. Messages and telephone calls to and from MASECO Private Wealth may be monitored to ensure compliance with internal policies and to protect our business.
MASECO LLP is a FINRA/SEC Registered Investment Advisor in the United States of America.
Helge Kostka, Chief Investment Officer Prior to joining MASECO Private Wealth, Helge helped to establish and grow the presence of Research Affiliates in Europe over the last 4 years. He began his career at Deutsche Bank in 1995, serving in a number of investment roles, including as head of qualitative alpha selection and
head of portfolio engineering. Helge started at Aviva Investors in 2009, initially heading up the product specialist team in the areas of investment solutions, equity, and multi-asset and later establishing the respective product management function.
Helge holds a bachelor’s degree in finance and accounting from Hogeschool, Utrecht, the Netherlands, and a Diplom Betriebswirt from Fachhochschule für Oekonomie und Management in Essen, Germany. Helge also graduated with an Executive MSc in risk management and investment management from EDHEC-Risk Institute.
Helge is considered an expert in Smart Beta and quantitative investing, and has spoken at various conferences around the globe. Having worked with HNW individuals as well as large institutions in different jurisdictions, his rich experience allows him to bring institutional investment practises into the private client world.
In 2016 the Financial Analysts Journal (FAJ) published Helge’s co-authored research around factor and smart beta exposures. In March 2017 CFA Institute named Helge and two co-authors as the winners of the 2016 Graham and Dodd Award of Excellence via CFA Institute; it is the first time that a Chief Investment Officer at a UK Private Wealth Management firm has received such honour.
I’ve heard this statement on numerous occasions and when one examines the neighbourhood it comes as no surprise.
Apart from the fact that NW8 is home to the American School, it is also home to the world renowned Lords Cricket Ground, a microcosm of all things British. With its elegant buildings, boutique coffee shops and vast expanses of pristine green grass, it provides visitors and residents with their very own piece of quintessential England without actually being in the midst of the hustle and bustle of London.
In addition, it is perfectly located for quick access into the West End and the City of London where London’s businesses, theatres and restaurants can be found. A few stops on a bus or underground train from the Art Deco style St Johns Wood Underground Station gets you into the heart of London, and when you return back home from the inner London frenzy you are back in this well-established friendly community reminiscent of a Home Counties village.
Clearly for visitors from the USA, The American School here is a big draw. It was originally founded in 1951 but has undergone massive changes over the years by incorporating adjoining buildings and completely redesigning its exterior and interior creating a spectacular environment for its pupils to study in. The school has an impressive track record of success and now teaches students from more than 50 different nationalities.
Moving home is always troublesome, but moving to a new home in a different country is understandably a hugely emotional time for families. However, in my conversations with my American clients, I am told that the expat American community find that living close to other people who are in a similar situation can be extremely comforting and, of course, having the spectacular Panzers Deli round the corner, which prides itself on having a wealth of American foods, is the perfect cure for feeling homesick.
Historically, St John’s Wood was once part of the Great Forest of Middlesex, and until the end of the eighteenth century it remained in agricultural use. Apart from a small portion around Barrow Hill, which was owned by the Portland Estate, most of St John’s Wood had been acquired by the Eyre family in 1732. A second, smaller estate, nestled alongside Edgware Road, was acquired by John Lyon in 1574; the estate was later given by him to his foundation, Harrow School, on trust to maintain the roads between London and Harrow in good repair. Hence, a number of local road names reflect these links. John Lyon’s Charity is today one of London’s leading endowed educational charities.
When building began in this area at the beginning of the nineteenth century, St John’s Wood became the first part of London to move away from the typical terraced houses and instead began to showcase the semi-detached villa. This somewhat revolutionary move was later copied in other districts of London. Despite many of the original houses and gardens not surviving the Second World War bombing raids, the area has still managed to preserve its original character.
As well as its history and the aforementioned famous cricket ground, there are many other attractions which draw both tourists and local residents to the area. Regent’s Park is just a stone’s throw away and is the largest open space for sports in Central London. The park not only hosts the world famous London Zoo, but also the highly acclaimed open air theatre where popular plays are regularly performed.
In modern times, St John’s Wood became home to the most famous recording studios in the world, the Abbey Road Studios, often used by The Beatles who brought the area into the public eye with the iconic album covering featuring an image of the group on the zebra crossing outside the studios. Today tourists from all over the world dodge the traffic in an attempt to recreate this iconic cover shot.
If moving to London is on your agenda and you want to discuss the St Johns Wood location further please don’t hesitate to contact me for more in depth information or just for some local restaurant suggestions.
Article by Paul J Bennett, Proprietor, Behr & Butchoff, 105 St. Johns Wood Terrace, London, NW8 6PL Telephone: 020 7722 7222
Whether posing for selfies with Lord Nelson and his iconic pigeons, visiting nearby Buckingham Palace or spending an afternoon enjoying the treasures at the National Gallery, every American in London surely passes through Trafalgar Square at one time or another. But how many of us have ventured the few steps off those well beaten tracks to the door of Benjamin Franklin’s house?
Here, behind the 18th century façade of 36 Craven Street, one of our favourite Founding Fathers lived and worked for over 15 years. This historic building was saved from dereliction in 2006, was painstakingly restored, and is
Image Source, Alamy Stock Photo
now a wonderful small museum dedicated to the exceptional Ben’s life and achievements in history, science, philosophy and politics.
Ben truly embodied the concept of a polymath. He was a writer, newspaper publisher, oceanographer, chess player, linguist and alphabetician. He helped draft the American Declaration of Independence, served as Ambassador to France and became the first US Postmaster General. As a scientist and inventor he gave us bifocals, the lightning rod, the eco-friendly Franklin stove, the glass (h)armonica and, last but not least, the flexible urinary catheter. His is the face on the $100 bill.
Less well known were Ben’s prolific talents as a musician and songwriter. He played violin, harp and guitar, and wrote drinking songs to friends, love songs for his wife and songs of political protest. Several of these were re-created and broadcast by the BBC for an imaginative programme called ‘Benjamin Franklin’s Ipod’.
Nearly 100 miles northeast in Thetford, Norfolk is the birthplace of Ben’s friend, contemporary and fellow American Founding Father, Thomas Paine. Paine was a hugely influential writer, radical politician and revolutionary thinker who challenged authority and injustice throughout his life. Emigrating to the US in 1774, Paine arrived in time to play an important part in the American Revolution.
Probably best known as author of The Rights of Man and for giving us countless quotable phrases like “these are the times that try men’s souls”, Paine was also an imaginative inventor who designed an iron bridge and a smokeless candle. Unlike Ben Franklin, Paine was a controversial hero, panned by some in his time for advocating free thinking, votes for all, abolition of slavery and a minimum wage. Although no museum yet honours Paine in his home town, visiting fans can trek the Thomas Paine Trail or salute Thomas Paine Day with locals every June 8th.
How it Feels When You’re an American by Karen Storey
My 19 year old dual national daughter doesn’t get it. She was born and raised in Britain but has always been an American citizen through me. Indeed, this was the only passport she held for the first 18 years of her life. Last year, she finally applied for, and received her British passport. She can’t understand why I still haven’t gone for mine. I can’t fully understand it either. It seems I have some strange emotional block in taking this final step. I came over to the UK when I was 20 years old. At the time I hadn’t intended to stay, but life took over and 36 years later, I’m still here!
”You have lived here longer than you have in America.” She says to me “Why don’t you just do it?”. As I search for an explanation I find myself fumbling with the answer, that maybe it has to do with spending my childhood pledging my allegiance to the American flag. She finds this odd, as kids in England don’t have an equivalent ritual. I describe how every morning at school my classmates and I, hands on heart, recited this pledge. Yet, nowhere in the Pledge of Allegiance did anyone ever say “I pledge my allegiance to the flag of the United States of America and any other country that I
happen to somehow end up living in one day”.
I tell my daughter that for me, it feels disloyal to take another citizenship. “Well then, isn’t it disloyal of you to be living here?” she asks. She has a point. So I say, “Perhaps, in my head, I’m sort of balancing it out by holding on to my sole nationality and passport.” That is the crux of it. My instilled sense of loyalty from my childhood is the impractically sentimental reason why after 36 years, I still hold only an American passport with indefinite leave to remain (ILR) in Britain. I was curious to see if I was alone with this feeling, so have been talking with a few other American expats
settled in Britain.
Cate Linforth is originally from Chicago and
has been living in the UK for over 12 years. She came to the UK for University. Now, married to a Brit, she finally decided to apply for British citizenship in April 2017.
She tells me: “I’d been struggling with the decision ever since I got my ILR back in February 2013. Part of me didn’t want to get it because of the amount of money I’d already paid to the Home Office, and I didn’t technically NEED to. However, once I met
my now husband and started to realise that I didn’t really have any intention of moving back to the US, I decided that it made sense to think about citizenship, not least because of the recent change in politics in the UK, as well as Brexit. It no longer made sense to be living and working in the UK, but not having any say in political changes happening over here”. Cate goes on to say that she had to fight to stay in the UK because of changes in legislation. She explains “I think that previously I’d thought that under my ILR I was invincible, but the reality is that if I had to move out of the UK for 2 years, for whatever reason, and wanted to return to the UK, I’d be back to starting point.” I had asked her if applying for dual nationality brought up any mixed emotions, and she tells me “I think even now I still struggle with the idea of being a British citizen. I’ve never been particularly patriotic, but something inside of me, valid or not, thinks that if I become a British citizen, it would almost make me less American. I’ve been losing my accent gradually over the last several years, no longer easily tan (hello permanently pasty skin!) and not least I really struggle to identify with the general populous sometimes in the US, but I had a real internal struggle about what it would mean to get my citizenship”.
I completely identify with the thought that
Linforth Family
somehow obtaining a British passport could make one feel less American. Having lost my own New York accent gradually over the years, sometimes it feels like the only part of me left that’s still American is the blue passport in my drawer.
Cate continues: “I really struggled internally about getting my citizenship. I don’t identify as British, I’ve always felt like a settled American in Britain. Getting my citizenship felt permanent to me. My whole adult life, I’ve been foreign. Whether it’s not quite fitting in to the UK because I sound different, or being seen as foreign by my own friends and family back home because I’ve picked up British phrases and colloquialisms, I’ve not just felt ‘normal’ for a very long time. I was wary about how my citizenship would change that. I don’t think that was helped much by my friends and family in the UK saying ‘Well, you’ll be British now’. I didn’t, and still don’t feel ‘British’. I don’t sound British. I think by resolving it I had to remember that it was a formality for me. It meant that no one could ever make me feel anxious about my immigration status in the UK again, and that perhaps I would feel better about politics and government, knowing that I could start to do my bit to make a difference. And I wouldn’t have to sit in one of those hideous lines at the airport anymore. And let’s be honest, by choosing to live in the UK for the last 12 years, I kind of have pledged allegiance“.
I ask Cate about her citizenship ceremony and she tells me: “My ceremony was in December 2017, and I felt really apprehensive in the lead up to it. My husband unfortunately wasn’t able to come because of an international work trip, so two of my best friends from University decided
to be there to support me. I was excited to finally be at the end stage, after so many years and so many thousands of pounds spent on immigration. I never had to worry about how the government’s immigration changes would affect me again. But would it make me feel less American? Would I no longer be able to say with such confidence that I was American? I wasn’t sure if it would taint any of my American-ness if that makes sense. The ceremony itself was actually quite emotional, as one of the Deputy Lieutenants for the West Midlands was an immigrant herself. She showed such empathy for the struggle that everyone in the room had gone through and the opportunity this brought to us. She really validated what a tremendous achievement it was. My girlfriends both made such a special day of it, going out for cocktails and lunch as well“.
Cate reflects on becoming a dual national and tells me: “I’m pleased that I’ve done it. I’m pleased that I can now vote in any future elections, and hold office if I so choose as well. I’m pleased about the doors that open in terms of easier access to commonwealth countries“.
Christina Davies, another American expat, now lives in the West Midlands with her husband and four children. She has also been here for 12 years. Her children are already dual nationals. She and her husband are in the process of applying for their British citizenship. Christina tells me:
“
We’ve invested a lot in our lives here and they really are here when I think about it. My husband and I started our married life here. My children were born here. We have paid through the roof for visas and ILR for the privilege to be here. And of course, I finally got a Land Rover!”.
She continues, “My husband and I both travelled extensively (domestically and internationally) as children and into our adult lives before coming to the UK., but England has still opened a world for us that we wouldn’t have known existed without living here. It has had a large part in moulding us into the people that we are today. For all of that, I am grateful“.
Christina adds: “Don’t get me wrong. I am proud to be American. I am grateful for my country and I proudly defend it almost daily. I flexi-school my children, and do an American curriculum on the days they are with me because of how important it is to us that they understand the incredible history and amazingness of the country that they are a citizen of, that they hold a passport for, that they explore a few weeks a year, and for a country where their entire extended family lives. I think we live in a state of confusion. When we get on a plane to fly Stateside we say we are ‘going home’, and then when we board a plane to fly to the UK, we also say ‘we are going home.’ But I also think we are extremely blessed, to be able to say that we are home in more than one place, in more than one country, on more than one continent. That is why we are applying for citizenship”.
It’s these final words from Christina that have got me thinking that dual citizenship perhaps does make sense emotionally, not just practically. She tells me, “We will be truly home whichever side of the Atlantic we are on. I will always consider myself to be an American, but with the extra privilege of also being a citizen of the UK. God Bless America and God Save the Queen!”.
With the tax deadlines looming closer and closer, we thought we would introduce you to some of the companies we have worked with over the years, who will be able to help you with any tax issues you are currently experiencing or need to address:
BDO LLP
BDO are ideally placed to help clients navigate and manage the often-complex tax compliance interactions between US and the UK tax systems, including:
• US and UK income tax returns for US citizens in the UK or expats living in US
• Non-resident US income tax returns (form 1040NR) for non-US persons
• Foreign bank and foreign asset reporting for US persons
• Delinquent US tax filers and assisting under the streamlined filing procedure
We are also able to assist non-US persons requiring to file US returns that may be ineligible for a US social security number by helping them acquire (or renew) an ITIN (Individual Taxpayer’s Identification Number) via their London based Certified Acceptance Agent.
Our US tax advisory team, based in London and the US, are able to advise clients with US connections, wherever they are based and on all US tax related matters including US estate tax planning and filing obligations associated with non-US companies, partnerships and trusts. Please contact any of Mark Walters, Andrew Harrison or Scott Wickham who’d be delighted to help.
When you live and work overseas, the last thing you need to worry about is the IRS. US tax law is complex, always changing, and probably the furthest thing from your mind.
Expat Tax Professionals was founded by international tax experts with extensive American tax code experience.
We don’t outsource anything to contractors - we only have our own seasoned, licensed CPAs and tax attorneys preparing and reviewing every tax return.
With Expat Tax Professionals, you have the convenience of being able to handle your taxes completely online or working directly with a seasoned CPA for more complex tax needs.
Think of our service as the best of all worlds — CPA Expertise. Online Convenience.
The US Tax & Financial Services specialist team of cross border advisors provides tax advice, guidance, planning and compliance services for individuals, partnerships, corporations, trusts and estates for anyone subjected to the US tax system, wherever they may be in the world. Established more than 30 years ago, US Tax & Financial has offices in London, Zurich and Geneva with clients in more than 32 countries. We also have dual handlers to manage individual tax obligations for US/UK taxpayers.
The international aspects of the US tax system are extremely complex; not only are the statutes and regulations alien to US-based firms, but the additional informational returns relating to almost all aspects of an expat’s international lifestyle are complicated and carry stiff penalties if not filed correctly. Many of us here at US Tax & Financial are dual nationals and our offices are outside the US. We live and work here with these international issues daily.
International taxation. Admittedly, not the sexiest of topics for most people. But we at Esquire Group aren’t most people.
Not only is the team at Esquire Group dedicated to international taxation, with specialised knowledge drawn from years of experience, but we also know first-hand what running a successful global company entails. With offices in multiple countries, we recognise the actual challenges of conducting international business, from cross-border tax issues down to managing multiple languages, currencies, and time zones. And, since many of us live as expats or as members of multinational families ourselves, we understand the realities of those challenges as well.
In other words, we get it.
For almost 15 years, Esquire Group has been helping clients navigate the complicated world of international tax matters. Because we are a boutique firm, we provide our clients with the kind of highly personalised service you won’t get from sprawling corporations. You’ll get to deal directly with our experts and dedicated in-house employees—who have been carefully selected by founder and CEO Jimmy Sexton, LL.M.—instead of being relegated to seasonal contractors.
Interested in having us prepare your tax return? Click here to get a quote.
From our home in Southern Florida, Hayden T Joseph & Co, first expanded to the UK in 2011 and now has a presence in Dubai and 12 countries in South East Asia. Our firm's expertise extends beyond individual tax returns to more complex situations such as estate taxes, trusts, gifts and entity returns. We have many private clients with closely held companies and can assist with transfer pricing, structuring, business expansion or investments into the US, Dubai or Asia. Finally, we are IRS Certified Acceptance Agents so can assist with ITIN applications. Send us an email and let's setup an introductory call today!
Expatriates have special tax considerations both at home and abroad. The complexity and constant change in tax laws and regulations demand a higher level of knowledge and service. It is important to work with a Certified Public Accountant knowledgeable of the unique reporting requirements facing US citizens residing abroad. The penalties are too significant to risk.
We make the tax compliance process as easy and painless for you as possible. We offer free consultations and up-front pricing.
Locations and time zones are not a hindrance, we have clients around the world, on six of the seven continents. We have systems established and in place to work with clients around the world. This includes a secure client portal for uploading documents.
Contact us today for a free consultation to discuss your filing needs.
Whether a new or seasoned expat, filing a US tax return may seem overwhelming, but luckily H&R Block Expat Tax Services can help! Their advisors specialise in taxes for US expats, relieving the stress of tax season and helping you meet your US tax filing obligations. Their virtual process is fast, easy, and secure.
H&R Block’s team of highly specialised CPAs, tax attorneys, and Enrolled Agents are trained to understand your unique tax situation. From simple returns to the more complex, your taxes will be completed with accuracy — in fact, it’s guaranteed!
H&R Expat Tax Services makes it easy for you to file taxes from anywhere. A dedicated tax advisor will be with you from start to finish, acting as an advocate throughout the filing process — all within a secure, virtual portal!
Satis Asset Management Limited
Contact: Ross Badger
Address: Ground Floor, 45 Pall Mall, London SW1Y 5JG
As an American living abroad your financial life is probably subject to many complexities. You may also be experiencing a reluctance from financial organisations to take you on. We are one of the few firms in the UK happy and able to provide you with the service you may be looking for.
We offer a family office fee-based approach that combines wealth management and specialist tax advice so that you can be sure you are making the most of your global financial position and reporting correct returns in the US and in the UK.
Our service includes:
• An understanding of your unique challenges
• An insight into the ever-changing cross border investment and tax reporting landscapes
• The ability to construct a ‘portable’ investment portfolio
• International tax planning advice and tax reporting in the US and the UK
• Administrative support
• Foreign currency advice
• Real estate advice
• Business and employee benefits advice.
The content of this blog is informative and entries are not a recommendation by The American Hour.
Sizing an under- or overweight portfolio can have further implications on the absolute level of risk. For example, if an investor doesn’t like bonds versus equities because of low yield, should they reduce bonds from 50% strategically to 25% tactically? Alternatively, should the investor go all the way and not allocate to bonds at all; in other words switch to 100% equity? The latter will cause a far less diversified and much riskier portfolio. The following graph shows a 50/50 combination of two hypothetical assets, which both have a Sharpe ratio of 0.5 and a volatility of 10%(4): It illustrates a Sharpe ratio deterioration for tilting or switching, which is also larger for portfolios with more diversified assets or strategies (Fig. 2 lower correlations, left).
Unsurprisingly in 1995 some investors believed that US equities were expensive and therefore started reducing their allocations to US equities. Unfortunately, in the following four years these investors had to experience significant performance headwind as valuation levels climbed even further!
I’ve heard this statement on numerous occasions and when one examines the neighbourhood it comes as no surprise. 
Whether posing for selfies with Lord Nelson and his iconic pigeons, visiting nearby Buckingham Palace or spending an afternoon enjoying the treasures at the National Gallery, every American in London surely passes through Trafalgar Square at one time or another. But how many of us have ventured the few steps off those well beaten tracks to the door of Benjamin Franklin’s house?
I ask Cate about her citizenship ceremony and she tells me: “My ceremony was in December 2017, and I felt really apprehensive in the lead up to it. My husband unfortunately wasn’t able to come because of an international work trip, so two of my best friends from University decided
to be there to support me. I was excited to finally be at the end stage, after so many years and so many thousands of pounds spent on immigration. I never had to worry about how the government’s immigration changes would affect me again. But would it make me feel less American? Would I no longer be able to say with such confidence that I was American? I wasn’t sure if it would taint any of my American-ness if that makes sense. The ceremony itself was actually quite emotional, as one of the Deputy Lieutenants for the West Midlands was an immigrant herself. She showed such empathy for the struggle that everyone in the room had gone through and the opportunity this brought to us. She really validated what a tremendous achievement it was. My girlfriends both made such a special day of it, going out for cocktails and lunch as well“.
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