Stocks, shops or even a home... our guide to all things Stateside
SHOPPING
EVERY year thousands of Britons pick the US as a holiday destination with shopping very much on the itinerary.
Many visit New York on ‘Black Friday’, the last Friday of November when stores offer massive discounts to drum up pre-Christmas sales.
US brands, from designer handbags to gadgets, are usually cheaper in America because there are no nasty export costs or taxes to add. Distribution bills are less because petrol is the equivalent of just 43 pence a litre compared to more than £1 here.
Eight years ago, before the financial crisis hit, shoppers flooded across the Atlantic because the pound went a long way. At $2 to the £1, tourists could stuff their suitcases with bargain price luxury brands. A pair of Ugg boots that cost £100 in London could be picked up for the equivalent of £50 in New York.
Angus Bond of Virgin Holidays, says: ‘New York is particularly popular around Black Friday. But Boston is also attracting British shoppers due to its lower sales tax.’
Even though the rate is less attractive today at about $1.50, it still gives Britons the power to buy luxury brands cheaper than in the UK. Luxury US goods prices are also creeping up over here as US makers seek to protect their profit margins in the wake of the dollar strengthening against the euro.
Mari Shor, senior retail analyst at investment group Columbia Threadneedle, says: ‘Big brands are increasing their prices in the eurozone and this is filtering through to the UK.’
Bagging an American bargain need not involve the cost of a flight and a hotel. You can make purchases from the comfort of your own sitting room.
But without a US delivery address, there will be hefty shipping costs and duties to pay – while some companies will not ship certain brands at all.
Using the website of upmarket department store Bloomingdale’s, for example, a US-based consumer can purchase a Minetta Crossbody Coach handbag for the dollar equivalent of £206 – and shipping is free. But a UK purchaser will pay £278, including shipping and taxes.
Florida-based shipping company MyUS, promises to shrink some of these costs for Britons. It provides buyers with a US shipping address – its warehouse in Florida – and then ships your shopping from there using courier firms such as DHL.
Chief executive Ramesh Bulusu says: ‘Most UK customers tend to buy toys, electrical appliances and cosmetics from the US as many named brands tend to be more expensive in the UK. It’s not just about price though, it’s also about availability. The choice of colours and sizes of jeans and shoes is broader, which appeals to many shoppers.’
Customers can order today and the item will be with MyUS within two days. Bulusu adds: ‘We hold items for 30 days free so that shoppers get the best rate for shipping if they have ordered several items at different times.’
Bulusu adds: ‘We find that when customers buy from shops online the estimates for duty and taxes can be high – because shops are fearful of underpayment errors.
‘If you have made three separate purchases that all adds up. The first kilogram of weight is the most expensive, but to add a second or third is substantially cheaper. We bill on actual weight rather than volume.’
Slavica Vojinovic uses MyUS and reckons she saves a fortune by shopping for both personal and business items in the US – but from her home in Battersea, South-West London.
The 42-year-old and husband Alex, 45, run Silver Archery, a supplier of bows and arrows. But most of the equipment they sell is sourced in the US – so they needed to find a cost-effective way of importing.
Slavica, who also buys perfumes and clothing for herself this way, says: ‘I reckon the savings are as much as 20 to 30 per cent.’
INVESTING
INVESTORS in US shares have enjoyed a golden period with the stock market more than doubling in value over the past six years.
But the stock market has wobbled recently over fears that the economic downturn in China will damage America’s growth prospects – a worry that last month led the Federal Reserve, the US central bank, to postpone an interest rate rise.
Yet with stock markets around the world looking sickly, the US still appears a relatively safe bet, according to experts – and there are ingredients for growth.
Colin Moore, global chief investment officer of Columbia Threadneedle, believes that the 2.6 per cent economic growth expected this year looks ‘awesome’ when compared to what is predicted for the eurozone and Japan. He says: ‘The US looks like the prettiest horse in the glue factory.’
Columbia reckons the country’s 310million consumers will drive economic growth on the back of improving jobs figures, falling energy costs and cheaper imports – thanks to the strong dollar.
For example, growing demand for upmarket athletic clothing to be used as everyday wear, means it is a buyer of L Brand’s Victoria’s Secret and Canadian firm Lululemon. Another sector with potential is biotechnology, reckons Columbia fund manager Diane Sobin.
She says: ‘Large pharmaceutical companies have been reluctant to invest heavily in research and development as prior experience suggests they did not see big enough returns.
‘They have been happy to let small and medium companies take the R&D lead and then buy them if their drugs have good trial results. This can be rewarding for investors in smaller biotech companies.’ Maike Currie, associate investment director at Fidelity Worldwide Investment, is optimistic about the US. She says: ‘The bull market is maturing but not coming to an end.’ She adds that the US is wellplaced to offer both income and growth options for investors. She says: ‘Although the US is not one of the world’s most highyielding equity markets, it has many cash generating companies that continue to pay a growing dividend stream.’
Investment funds recommended by experts include, for growth investors, Natixis Loomis Sayles US Equity Leaders, T Rowe Price US Smaller Companies Equity and Dodge & Cox Worldwide US stock fund.
For investment trust enthusiasts, there is JP Morgan US Smaller Companies. And income seekers could consider Aviva Investors UK Equity Income II fund.
Bold investors who think they can spot the next Apple or Amazon, the kind of companies that helped drive the stellar growth of the market in recent years, can also purchase individual shares.
Many UK stockbrokers let you buy US shares direct. Some will convert sterling at the point of purchase, while others, such as Charles Schwab, require a dollar account to trade in US shares and you need a minimum $10,000 to open an account. The broker charges £8.95 per online trade, while Barclays charges £12.95 and TD Direct £12.50.
Kully Samra, managing director of Charles Schwab UK, says: ‘The first thing to do before getting started is to complete a W-