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  1. #1

    Robo-advisers and Foreign Currency

    Is anyone aware of any UK-based Rob-advisers deal with foreign currency accounts? i.e. I have a foreign currency, and I want to take advantage of a robo-adviser's services but I don't want to convert my foreign currency to GBP. Is it possible?

    Any insight and expertise would be much appreciated.

  2. #2
    Do you mean, you have for example, 100,000 in Euros and wish to invest that in euro denominated funds? (Replace Euro with currency of your choice)

    I think you'll have to find a RA situated in a country where that's the native currency. RAs work on the idea of pooled investments to reduce costs and your requirement is going to be too niche. That's my guess anyway.

  3. #3
    Thanks for the insight.

    It's actually Canadian dollars... I am discussing with the only Canadian robo-advisor who claims to know how to handle expat Canadians and their investments, but we will see how that goes... I just want the company to make sure my portfolio is limited to funds/etf's that are registered in the UK so my gains can be considered Capital Gains, rather than income...

    The alternative strategy (which has inspired the question for this thread) would be to bring the Canadian dollars to a UK robo-advisor firm that offers accounts in Canadian dollars.

  4. #4
    The point of going robo is that it's designed to be a much cheaper solution than a bespoke solution tailored to your needs of using UK domiciled funds or UK reporting offshore funds.

    That priority would be waaay down the list for the typical Canadian who has absolutely no need of such a restriction and wouldn't want to pay for it. A few bps extra on fees to access funds that have the underlying assets that Canadians would want but situated somewhere out of Canada and meeting the requirements of non-Canadian resident investors (specifically, UK tax resident investors) is not going to be a popular feature among the customer base of Canadian robo advisers.

    Robo is effectively: pile it high, sell it cheap, get economies of scale by having broad appeal across the core demographic, to compete with the rivals offering cheapest fund access per dollar invested within the model. That way hopefully the customers still see it being not too expensive compared to just building their portfolio themselves out if their preferred building blocks. Those direct rivals against whom they need to be price-competitive, being other robos but also the more expensive "proper bespoke" advised or wealth-managed options.

    While a Canadian firm might allow expats to access its services, most Canadians are not UK tax residents so I think the feature you want is just not going to be something they could want to implement - as any restriction that's unnecessary for the core customers is usually going to make them more expensive/ less competitive.

  5. #5
    One might think that they could be amenable to taking cash from some customers in USD, as some strategies would see them deploying some portion of the customer cash into portfolio building blocks which include ETFs targeting North American or Asian/EM markets, and it's possible for those building blocks to be bought in USD even on the London market. However, most/all those financial instruments are available as GBP-priced funds and a UK provider will have massively more GBP customers with the odd USD customer being a very unreliable portion of the investor base - so a USD deposit facility isn't usualy worth implementing.

    Extending the logic, CAD-priced London-listed ETFs for the major markets don't even exist ; so any money you gave them, they'd have to convert before they could invest. A cost to them to implement the facility - with no benefit for 99.9% of the customers - is unattractive for someone building a cost-focused robotic investment solution.

    If you do find someone taking Canadian dollars and giving UK robo advice on how to invest it, they'll be charging you a fee for currency conversion to buy and sell the investments. So you might as well just independently use an fx broker to buy you the pounds and sell them back to CAD at the end of your investing journey. That way you don't have to restrict yourself to the 'needle in a haystack' UK regulated firm that offers accounts to be funded in CAD, if such a firm even exists. Investing is better value if you can work around such restrictions and access a broader piece of the market.


 

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