More than 180,000 US expats based in the UK could be affected by fund supermarket Hargreaves Lansdown’s decision to remove hundreds of investment trusts and exchange traded funds from its platform.
As reported here, the regulations covering PRIIPs, or packaged retail insurance-based investment products, went live on January 1. And Hargreaves pulled the funds last week as the products did not comply with new European rules on disclosing risk information to retail investors.
Other fund platforms are expected to make similar moves, according to a report it today’s FT , which stated that the delistings will affect US nationals who plan to return home; investing in such products is a cheap way for them to save for retirement.
Due to complicated double taxing US expats who invest in European mutual funds face high taxes on their returns without careful financial planning.. Of the 296 investment trusts removed from the platform, 200 are predominantly North American. Most of the 900 ETFs it removed were also domiciled in the US.
The FT report said that Hargreaves believes that the move will not restrict clients who already invest in the funds, but said it was unlikely to add many of the US products back on its platform.
“It’s tough because EU regulations such as PRIIPs ask for forward-looking projections, while the US Securities & Exchange Commission absolutely forbids them,” Kristopher Heck, managing partner at Tanager Wealth Management, told the FT.