Plan for possible ISA update with individual stock allowance

đź“Š Investing
1

Hello,

With the idea that ISA changes might bring an allowance for UK stocks, I’ve been thinking about how to incorporate them into my portfolio.

The majority of my portfolio is vanguard developed world (VEVE) and as such if we do get this additional allowance limited to individual stocks my plan is as follows.

Take the UK companies which are inside VEVE and their respective allocations. UK makes up about 4.6% of VEVE with around 110 odd companies. the biggest for example is AstraZeneca plc at 0.40% of VEVE, and scale them up to being 100% as if I were making a new portfolio and copying the weighted allocation.

In this example since UK makes up 4.6% of VEVE, I would multiply the holdings of AstraZeneca of 0.40 by 21.73 to make 8.69. repeat this until I have a new portfolio of 100% with the new adjusted weight of the VEVE holdings.

Trading 212 allows me to make a portfolio and set stock allocations to one decimal place for up to 50 companies which means I can then take the top 50 holdings and build a portfolio of them. since this will cut the low end of the 50 or so companies I then do a second round of sizing up to make the adjusted weight for the 50 companies to be 100% this will deviate from the normal exposure that I get from ETFS but close enough IMO without having to have 2- 50 stock portfolios.

I’m planning on doing this process for VEVE as well as the following other UK stock ETFs/funds as I’ll like to look at other options

FTSE 100 UCITS ETF (VUKE)

FTSE U.K. All Share Index Unit Trust

and for income option

FTSE U.K. Equity Income Index Fund

Do you have any other ideas on how a passive ETF investor would deal with a possible additional allowance for individual stocks?

Thank you for reading

2

It all depends on the scope or limitations of this.

If it’s UK based mutual funds and ETFs, then the scope is very limited.

If it’s Uk listed shares, then you have the option of GDRs and Investment Trusts.

It’s good you’re planning ahead but in truth we really don’t know.

It would be good if people realise the value of ITs though.

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IMO if we do get it, it will have to be something we would have to pay stamp duty tax on as that’s the trade-off. we get more allowance, they get more stamp duty tax as well as funnelling people to buy shares in UK companies that would not have done so before.

GDR and IT are something I’ll look into but ya, will be interesting to see what comes out.

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If they do allow you to invest this mooted additional allowance in trusts, I’m banging most of it in something like JAM which is US-focused.

I’d imagine they’ll close that loophole – the question is, how?

If you preclude all trusts then that includes ITs like HG Capital which invests in UK software/ service companies.

Perhaps they’ll say a fund has to have X% invested in the UK to qualify but that’s going to a pain to police.

It’s very early days. Hopefully, we’ll get more meat on the bone during November’s budget statement.

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