Deep Dive #10 What UK investors must know before investing overseas

**Tom Seiber** (0:09)
Hello, and welcome to the latest special deep dive episode from the AJ Bell Money and Markets podcast. I'm Tom Seiber, content editor at AJ Bell, and joining me is my colleague, Hannah Williford. Hi, Hannah.

**Hannah Williford** (0:21)
Hey, Tom, how are you?

**Tom Seiber** (0:23)
Well, thank you. How are you doing?

**Hannah Williford** (0:26)
I'm very well. I'm feeling like a gamer here. I've got my fancy LED lights, I've got a new mic, so I think my brother would be very proud of me.

**Tom Seiber** (0:38)
Yeah, we're kind of influences in training, aren't we? So, you know, we're getting there with all our tech. In this edition of The Pods, we're going to take a detailed look at investing in overseas stocks, the pros and cons, the challenges involved and the things you need to think about.

**Hannah Williford** (0:54)
That's right. And we've got two interviews in this episode. I chatted to our very own Paul Angell, who is part of the AJ Bell Investments team, who spoke about the difference of managers who live in the area where they invest and those that live abroad and look from there.
We also spoke to our funds and investment trust writer, Eve Maddock-Jones, who talked to John Citron, the manager of the JP Morgan Emerging Markets Growth and Income Investment Trust. Plus, we'll be joined shortly by our shares and markets writer, Martin Gamble. He's going to tell us all about how different global markets compare on things like valuation, dividends and the types of companies which they dominate.

**Tom Seiber** (1:42)
But first, we're going to talk about how many people end up investing in global stocks, and that's through trackers. So Hannah, could you, you've been looking at this, could you tell us a little bit about that whole topic and how people perhaps start off by investing in international stocks?

**Hannah Williford** (2:00)
Yeah, so global trackers are kind of quite an easy win, I think, for early on investors because there's a type of investment that's going to give you a little bit of everything. So you're investing in a single fund that's going to hold companies in the US, in the UK, in Europe, and that means you're getting a lot of different sectors, you're getting a lot of different regions. So there's a lot of diversity baked into that.
You have two different ways that you can do that. So you can invest either through a USITS fund tracker, which is probably the more traditional method that you'd be familiar with, or you can invest through an ETF. Now, I think a lot of times ETFs and trackers are used as the same term. This is a pet peeve of mine, I have to say.
What the difference is, and what's helpful to understand when you're picking these products, is ETFs versus a USITS fund. It's kind of like getting a sandwich in aluminum, or as you would say, aluminum foil, versus in a plastic wrapping. You're getting the same sandwich inside, but you're just getting a little bit of a different package, which means they trade a little bit differently.

**Tom Seiber** (3:25)
Can I spell out in this day how much I love this analogy?

**Hannah Williford** (3:28)
Please.

**Tom Seiber** (3:28)
Before you go on. My absolute favorite, I think, of all time. But yeah, go on, sorry to interrupt.

**Hannah Williford** (3:37)
Now, I've heard a lot of different analogies about this, and the sandwich one is the only one that clicked with me. It's what I've gone forward with.
But yeah, so ETF is the main differences that you can trade them throughout the day. Funds at one, trading throughout the day, you don't exactly know what price you're getting. ETFs are trading like a stock, which is kind of the main difference. So the other thing that's important to know is that in a tracker fund, usually they are weighted by market cap. So the bigger companies are going to get the bigger slice of your assets. The smaller companies are kind of going to be fighting for those little percentage points at the bottom.

**Tom Seiber** (4:19)
Yeah, I think they're all really useful points. And obviously, we talk about diversification a lot, both on the podcast and we write about it a lot on the website. And I think geographic diversification is obviously important. And these products allow you to achieve that. The click of a button really is very simple. But you talked about the difference between trackers and ETFs.
What other differences can people look for when they're trying to compare what perhaps on the face of it look like quite similar products?

**Hannah Williford** (4:49)