Investors looking to trade shares in some of the biggest companies in the US can now do so for free via Bestinvest’s online platform.
Bestinvest said investors on its site can, as of today, trade US equities without being lumbered with any share dealing fees.
For investors wanting to use Bestinvest’s platform to trade UK shares, the group’s £4.95 per trade fee still applies.
Stateside: Bestinvest investors can trade US equities without being lumbered with any share dealing fees
The investing platform claims it offers a ‘competitive’ foreign exchange fee of 0.95 per cent on US trades of all value and imposes a maximum service fee on invested assets of 0.2 per cent a year.
Investors who use the Bestinvest platform can add their selected US stocks to an existing account, like an Isa, general investment account or self-invested personal pension, or open a new account.
No foreign exchange fees will be levied on the reinvestment or distribution of US equity dividends, Bestinvest added.
Jason Hollands, managing director of Bestinvest, said: ‘While Bestinvest users have long been able to have exposure to US equities through our extensive range of funds, investment companies and ETFs, the addition of almost 500 individual US stocks adds an extra layer of choice to our existing selection of more than 3,000 funds, shares, investment trusts, Exchange Traded Funds (ETFs) and, for those investors able to tolerate higher risk, the ability to invest in Venture Capital Trust (VCT) new issues.
‘The S&P 500 makes up about 80 per cent of the total US equity market capitalisation and is one of the most widely watched market indexes across the globe, meaning Bestinvest customers can now dabble in some of America’s largest companies directly from their account.’
As required by other platforms, any UK Bestinvest investor wishing to snap up US shares will need to complete a W-8BEN form to confirm they are not resident in the US and secure a tax reduction on the dividends and interest they earn.
Investing in US stocks
The Dow Jones Industrial Average, the S&P 500 and Nasdaq 100 are the key US indices to be aware of.
The S&P 500 is a stock market index tracking the stock performance of 500 large companies listed in the US.
Constituents of the S&P 500 include Apple, Microsoft Corporation, Amazon and Alphabet. Many of the big US tech stocks have struggled in the past year amid rising costs and headcount reductions.
This week, US equities rose after Federal Reserve chair Jay Powell spoke for the first time since January’s employment data sent a chill through markets.
Watch closely: This week US equities rose after Federal Reserve chair Jay Powell spoke
Mr Powell said the US central bank may need to hike rates higher than expected, but his comments were less hawkish than some analysts had been expecting.
Any investors based in the UK keen to snap up some US stocks should make a careful note of any dealing costs involved, and consider factors like currency fluctuations and taxes.
With foreign exchange risks, if the US dollar falls against the pound, then the value of your US shares would also drop. On the other hand, if the US dollar strengthened against sterling, the value of your US shares would rise.
It is also important to consider that most brokers will not list every possible stock in the US.
Rather, they will focus on US stocks which are most popular with UK-based investors. You may get the option to snap up the shares via funds, exchange-traded funds or investment trusts.
As well as Bestinvest, there are a string of potential platforms from which UK investors can purchase shares in US companies.
Earlier this month, top US broker Charles Schwab revealed that it was allowing investors to invest in US listed stocks with $0 commission for online trades and no sign-up fee. Previously, investors were required to make a $25,000 minimum investment to use the platform.
Unlike other investing platforms based in the UK, Charles Schwab’s platform trades only in US dollars.
eToro and Freetrade do not charge any share dealing fees on shares, ETFs and investment trusts, although there are currency fees for buying US stocks.
Some brokers offer UK investors the chance to snap up fractional shares. This lets investors own a piece of a share rather than one or more whole individual stocks, which can be very expensive.
As with any form of investing, be aware that you may lose all the cash you invest as stocks, whether in the UK, US or elsewhere, can and do move up and down. Do your research carefully before taking the plunge with any investments and keep up-to-date with the financial results and reports of any company you are thinking of investing in.
