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Post by Fletchsmile on Sept 5, 2019 17:32:28 GMT 7
I'm having a look at platform providers outside the UK. I'm think of moving some more money/ investments.
I want a platform provider with a decent choice of funds that I can also borrow against.
It'd be useful to have access to UK unit trusts, mutual funds, OEICs etc that I'm familiar with, so I could look for some my favourites.
I was looking at interactive brokers
Couple of questions:
1) Are these all the (mutual) funds a non-US resident would have access to? or am I missing something / there is more. I'm not counting ETFs here, just looking at funds. It'd be nice to access say Lindsell Train Global, Royal London Sterling Extra Yield etc
2) For borrowing against the portfolio. Can anyone point me in the direction of where it is on the website? I couldn't find it. I could see margin trading.
What I'm looking for is if I place a portfolio of say GBP 100 k, how does their borrowing against this work? i.e how much can I borrow? at what rate? what are the Loan to Value (LTV) %s they use in using the investments as collateral for the loan etc etc
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Post by rgs2001uk on Sept 5, 2019 20:51:27 GMT 7
I understand what you are doing, and why you are doing it, in some ways it makes sense, not something I would consider, sorry can be of no help, not something I have ever looked into.
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AyG
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Post by AyG on Sept 6, 2019 7:03:11 GMT 7
IBKR is probably not for you. The range of funds available is tiny. Of the seven fund managers available to non-US citizens most will not accept private clients. Others require extensive paperwork up front and may still reject you. More generally, I think you're not going to get access to Lindsell Train or Royal London offshore. I don't believe IBKR offers borrowing - only margin trading. Whilst I recently opened an account with IBKR, I'd be reluctant to recommend them. The trading platform is difficult to use and doesn't have the "enter a market order, get a price preview, accept/reject" that I'm used to. I've had problems with cash withdrawals being rejected by my bank. And one (of six) stock transfers in messed up royally. Really, the only plus side is that they are very cheap and support is pretty good. Edit: You also need to have your mobile 'phone with you to log on which irks me. Internaxx offers a much wider range of funds (599), but few of them are denominated in Sterling (not sure if that would be an issue for you). It doesn't offer borrowing, AFAIK. www.internaxx.com/iframe/fund-selector
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FIREinTh
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Post by FIREinTh on Sept 8, 2019 21:20:52 GMT 7
Hi Fletch, AyG, is right about a limited number of mutual funds available to non-US residents. They do have a tool called the mutual fund replicator that tries to find an ETF or combination of ETF's that are highly correlated to a specific mutual fund, the goal being to lower the management fee using ETFs. I'm not sure if it's a gimmick or if it's worthwhile. www.interactivebrokers.com/en/index.php?f=6916Yes, they only have margin trading, and I'm not sure what the difference is with borrowing against a portfolio like with other brokers. Portfolio margin allows more than the normal 50% Reg T margin. www.interactivebrokers.com/en/?f=30534&q=portfolio%20marginAs for AyG's other points, I couldn't disagree more. Their webtrader is the simplest interface in the world to use. I still have no idea why he expects a price preview and accept/reject windows with a market order. The only type of market order I'm aware of is the type that is executed as fast as possible at the bid/ask. AyG, maybe what you're used to is not the norm? www.investopedia.com/terms/m/marketorder.asp"A market order is considered the most basic of all orders. It is meant to be executed as quickly as possible at the current asking price for a security. That is why certain brokerages include trading applications with a buy/sell button. Hitting this button generally executes a market order. In most cases, market orders incur the lowest commissions of any order type, as they require very little work from either a broker." "Any time a trader seeks to execute a market order, this means the trader is willing to buy at the asking price or sell at the bid price. Thus, the person executing a market order is immediately giving up the bid-ask spread." Sounds like your cash withdrawals getting rejected is a problem with your bank, not Interactive. It is possible to get a security token or to cancel two-factor log-in authentication so you don't need your phone. Let me know if you have any other questions. Cheers!
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AyG
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Post by AyG on Sept 8, 2019 21:43:25 GMT 7
As for AyG's other points, I couldn't disagree more. Their webtrader is the simplest interface in the world to use. I still have no idea why he expects a price preview and accept/reject windows with a market order. The only type of market order I'm aware of is the type that is executed as fast as possible at the bid/ask. AyG, maybe what you're used to is not the norm? Sounds like your cash withdrawals getting rejected is a problem with your bank, not Interactive. It is possible to get a security token or to cancel two-factor log-in authentication so you don't need your phone. I can only presume that you have very limited experience of different brokerage platforms - particularly those outside the Republic of Trump. The "preview/accept" I have experienced with Internaxx, Saxo, Interactive Broker, and a few others that I can't recall at the moment. This is absolutely the norm for European brokers. As for "Their webtrader is the simplest interface in the world to use", that's frankly ludicrous. I presume again based upon your very limited experience. Webtrader is on a par with Saxo, but far more complex than Internaxx et al.. "Sounds like your cash withdrawals getting rejected is a problem with your bank, not Interactive." - not so. If you're resident in one country, but have a bank account in a third country, IBKR does not allow you to override your address for BACS transfers to match your address in the third country. (In my case, resident in Thailand, bank account in UK.) Still good to know about not having to use one's 'phone. I'll look into that.
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FIREinTh
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Post by FIREinTh on Sept 9, 2019 10:30:34 GMT 7
Have you tried a wire transfer? Your bank account should be able to accept a wire transfer from anyone. Wire transfers from Interactive are always in their name and I've never had a problem receiving them.
The security token might be more inconvenient than using your phone. Make sure you read the disclaimer carefully if you decide to cancel 2FA (no security token or code by phone).
"Sounds like your cash withdrawals getting rejected is a problem with your bank, not Interactive." - not so. If you're resident in one country, but have a bank account in a third country, IBKR does not allow you to override your address for BACS transfers to match your address in the third country. (In my case, resident in Thailand, bank account in UK.) Still good to know about not having to use one's 'phone. I'll look into that.
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Post by Fletchsmile on Sept 9, 2019 12:35:33 GMT 7
Hi Fletch, AyG, is right about a limited number of mutual funds available to non-US residents. They do have a tool called the mutual fund replicator that tries to find an ETF or combination of ETF's that are highly correlated to a specific mutual fund, the goal being to lower the management fee using ETFs. I'm not sure if it's a gimmick or if it's worthwhile. www.interactivebrokers.com/en/index.php?f=6916Yes, they only have margin trading, and I'm not sure what the difference is with borrowing against a portfolio like with other brokers. Portfolio margin allows more than the normal 50% Reg T margin. www.interactivebrokers.com/en/?f=30534&q=portfolio%20margin..... Let me know if you have any other questions. Cheers! Thanks for those links. Particularly on the margin trading. They're what I was looking for. Particularly the FAQ
I also looked your website article on how you're using it, which will be similar to how I want to use
and also a thread we had about it
seems as it fits the bill. To quote your website:
For me margin trading is when you open a contract on margin. It will have an initial margin and a maybe variation margin. The margins are set and fixed per contract. So you could buy XYZ at 100 and the margin requirement for the contract is say 15% = 15. The position may be revalued daily and the margin may go up and down. You provide collateral in some form to operate this account. So you put say 15 down on an investment of 100, and it is secured against other investments as collateral.
Borrowing against a portfolio I look at differently. There you set up a portfolio then borrow against it as a second step. The amount you borrow isn't necessarily fixed, and you can choose how much to borrow, based on a loan to value (LTV). So you have say 100k investments and borrow 60k against. You can borrow more or pay amounts off like an overdraft. The main restriction is the borrowing will be capped based on the LTVs of the investments. So if the investments have a blended/average LTV of 70%, you can borrow and change any amount aany time as long as you are less than 70k
I guess at the end of the day they will give a similar result if the collateral in both cases is investments.
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Post by Fletchsmile on Sept 9, 2019 12:51:43 GMT 7
Thanks for the reposnses above on IB's mutual funds. Seems like I wasn't missing anything. I'd seen their headline 10,000 mutual funds, so was disappointed to see only half a dozen UK offerings. Seems like most are US-investors choices. Based on what I've seen the UT range isn't that interesting.
I'll look into the mutual fund replicator more. The issue there is that I pick most of my UTs deliberately as with an aim for superior performance. Not to mention no bid-offer spreads etc
FireinTH Do IB accept your investment trusts and do they have % borrowings / LTVs against them in your portfolio margin account? The issues I currently have are that: 1) Stan Chart's range of unit trusts is somewhat limited
2) The annual fees on funds with Stan Chart are a bit higher than my UK equivalents. That's basically Singapore. That's OK on existing stuff, as I weigh up the extra cost vs being able to borrow at good rates.
3) Stan Chart doesn't let me borrow against my Investment Trusts. They don't quality for LTVs On the other hand StanCharts borrowing facility has very good rates. Being an accredited investor their rates are lower than IB. i.e EUR 0.38%, GBP 1.1%, etc vs tiered rates of EUR 1.5% to 0.5% and GBP 2.128% to 1.128%
So basically although the liabilities side is good at StanChart, with good rates and very convenient, the assets I can buy are limited. Hence I'm looking for somewhere that is good on the asset side for me, even if not quite as good on the liability side At the moment my GBP investment trusts are basically just a buffer I keep in reserve, should I ever need to realise cash or get a margin call. So they're just idle
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FIREinTh
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Post by FIREinTh on Sept 9, 2019 19:02:59 GMT 7
Yes, Interactive has lower maintenance margin requirements for large Investment Trusts that have a lot of volume, such as MNKS, SMT, JMG, WTAN (20% maintenance margin). Smaller, less liquid trusts like JESC and BRFI have 100% margin requirements. If you're curious about specific margin requirements just let me know and I'll look them up on their trading platform. I heard Interactive has the best margin rates around, and I'm jealous of your rates at StanChart. If I had those rates I'd buy another condo!
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Post by Fletchsmile on Sept 11, 2019 15:35:17 GMT 7
I signed up for the demo mode this morning. Seems pretty easy to use. Placing a trade looks basic and straight forward if you want it to be,or looks like other features to be a bit more sophisticated if you prefer that My main issue is that the demo mode is very US centric, with little on Europe and rest of the world. That and it keeps telling me something like I've been disconnected
Also the functionality is restricted to a few things because it's a demo. So I'm not sure I can't do things because its just in demo, or that it just doesn't do them that way Now that UK and European markets are open I can suddenly find the ITs I wanted to look at. Couldn't find them before. Seems like in demo mode apart from the US and other sample data, you need to wait until that market is open, to get any data. The other thing that strikes me is that it seems to keep trying to get you to subscribe for data by telling you you don't have access. eg LSE is GBP 5 per month Do you actually need to subscribe for market data on LSE? Or can you just use say data delayed by 15 minutes for free?
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Post by Fletchsmile on Sept 11, 2019 16:04:37 GMT 7
Yes, Interactive has lower maintenance margin requirements for large Investment Trusts that have a lot of volume, such as MNKS, SMT, JMG, WTAN (20% maintenance margin). Smaller, less liquid trusts like JESC and BRFI have 100% margin requirements. If you're curious about specific margin requirements just let me know and I'll look them up on their trading platform. I heard Interactive has the best margin rates around, and I'm jealous of your rates at StanChart. If I had those rates I'd buy another condo!
Thanks for the offer on the margins. It's something I want to check out - so will try it in the demo first if I can see it.
Where does it show the margin on an individual security rather than portfolio as a whole?
I've found one way to calculate it, by using the <order entry> part of Mosaic to look at the margin of my portfolio before doing a trade then using the <check margin> under the <advanced> part to see what it would be if I did the trade. The diff of course will be margin on the trade so I can work it out. SMT for example does work out at 20%
But there must be a simpler way to see the margin on a security? Where should I click?
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FIREinTh
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Post by FIREinTh on Sept 11, 2019 21:14:18 GMT 7
Yes, Interactive has lower maintenance margin requirements for large Investment Trusts that have a lot of volume, such as MNKS, SMT, JMG, WTAN (20% maintenance margin). Smaller, less liquid trusts like JESC and BRFI have 100% margin requirements. If you're curious about specific margin requirements just let me know and I'll look them up on their trading platform. I heard Interactive has the best margin rates around, and I'm jealous of your rates at StanChart. If I had those rates I'd buy another condo!
Thanks for the offer on the margins. It's something I want to check out - so will try it in the demo first if I can see it.
Where does it show the margin on an individual security rather than portfolio as a whole?
I've found one way to calculate it, by using the <order entry> part of Mosaic to look at the margin of my portfolio before doing a trade then using the <check margin> under the <advanced> part to see what it would be if I did the trade. The diff of course will be margin on the trade so I can work it out. SMT for example does work out at 20%
But there must be a simpler way to see the margin on a security? Where should I click?
I think that's the best way to find out current margin requirements - using the check margin button in the order preview window. Their website has a contract search function, but it often says "default" for margin requirements or it's out of date. Once you have a stock in your portfolio, you can right-click on it and select 'check margin impact' which will tell you the change in margin if you sell it. If there's another way I'm not sure.
You need to be careful when trading a contract that isn't in your base currency. The amount of the order and commission will be in the contract's trading currency, but the margin requirements will be in your base currency. So you need to do a quick currency conversion find out the margin percentage.
It must be the demo version that's restricting you to contract searches only during market open. That's definitely not an issue with the main version. You can even place pre-market orders at any time.
It will always ask you if you want delayed data so just click yes. You can upgrade to real-time data any time. Delayed data is always free. You don't need any data (real-time or delayed) to place an order, but you will get a warning saying that's not a good idea. They have new feature that offers snapshot quotes for 1 cent each which is perfect if you don't plan on buying or selling often.
A lot of traders will use Interactive for order execution but use another platform for charting and data. Their charts aren't the greatest. It all depends what you're used to.
I'm sure anything you want to do and more is available in Trader Workstation. The online documentation can point you in the right direction:
Here's a 1,700 page pdf version:
It would be an understatement to say it took me a long time to get comfortable with it. AyG, that's probably why I said their webtrader is the easiest thing in the world! Actually, my Russian friend can use it now so it can't be that hard
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Post by realisedurgency on Nov 21, 2019 18:57:45 GMT 7
About to buy some shares of MNKS, SMT & SCAM via IBKR. With an account in Euro and the shares I want in GBP I have a couple of different options when making an order, at least if I use the downloadable Trader Workstation. Found this video showing how it's done: - [17:06-23:05] - shows buying using a margin loan
- [23:05-25:45] - shows buying using the currency conversion option
I assume currency conversion makes the most sense for me. That said the lady briefly mentions the option of converting currency ahead of time so you have enough of the currency in the denomination of the shares you want to buy. For those who have done this on IBKR before what do you do?
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Post by rgs2001uk on Nov 21, 2019 20:14:41 GMT 7
^^^^ Excellent choices, I hold the first two but not the latter.
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FIREinTh
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Post by FIREinTh on Nov 22, 2019 10:00:37 GMT 7
Good job on getting your account with Interactive Brokers.
First off, the base currency of your account does not affect what you can buy or sell or what currencies you can hold. So, that's not an issue when deciding to use margin or do a currency conversion. Your base currency is just used to display the Net Liquidation Value of your account and for some fees.
If you were not planning to use margin for investing in this account (by this I mean investing more than the funds in your account), I would do a currency conversion for those transactions. If you borrow GBP while holding another currency such as EUR, you will be charged interest every month. That wouldn't be an issue for a short-term transaction, but you're probably going to hold those funds long-term. I wouldn't want to pay interest for 10 or 20 years or more when I have the funds in my account in another currency.
Also, when you're an expat, the intermediary currency you buy a fund in is irrelevant. For example, let's say you're an expat in Thailand spending THB. You want to buy an ETF that only holds stocks in the US which the fund buys in USD. That ETF has options of USD, GBP, or EUR available on the London Stock Exchange. Let's say you choose GBP. Any change in USD/GBP will be offset by GBP/THB. The only currency exchange that matters is USD/THB.
Another way of saying that is let's assume the value of stocks in USD stays the same for one day, but the USD gains on the GBP. The next day when you check your account the value of that ETF will increase in GBP which will make you feel good (since GBP went down so you need more pounds to equal the same number of USD). But, then you'll realize when you convert to USD or THB the value of your investment is actually the same. If you were living in the UK and spending GBP that increase of your investment in GBP would matter, but it doesn't when you're in Thailand. Again, the only conversion that matters is USD directly into THB.
If only making money was as easy as doing a currency conversion through an intermediary currency...
In a nutshell, when you have the funds and are investing long-term it's best to do a currency conversion rather than use margin. The currency you buy a fund in doesn't matter when you're an expat.
About to buy some shares of MNKS, SMT & SCAM via IBKR. With an account in Euro and the shares I want in GBP I have a couple of different options when making an order, at least if I use the downloadable Trader Workstation. Found this video showing how it's done: - [17:06-23:05] - shows buying using a margin loan
- [23:05-25:45] - shows buying using the currency conversion option
I assume currency conversion makes the most sense for me. That said the lady briefly mentions the option of converting currency ahead of time so you have enough of the currency in the denomination of the shares you want to buy. For those who have done this on IBKR before what do you do?
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