Investing abroad

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5. UK companies are foreigners too

Any portfolio that contains UK blue-chips is likely to have some foreign exposure already. Most large companies in the UK carry on a proportion of their business abroad. Some even take in more revenues and profits from foreign operations than they do from domestic ones. Here are just a few examples among major British multinationals:

Source: Annual reports, April 2003.

Smaller companies too can sometimes be heavily dependent on foreign sales. Data storage company Plasmon, a member of the tiny FTSE Fledgling index, acquired a US division of Dutch blue-chip Philips. This lifted the proportion of goods it manufactured in America to 78% of total turnover. Scarcely any of that was exported. Arguably, this made Plasmon more of an American smallcap than a British one.

When you are looking to allocate cash abroad, first check the exports and foreign operations of the UK companies you hold. Always allow for whatever exposure you already have. Otherwise you may end up placing far heavier bets on particular foreign markets than you realise.

You may even conclude that you do not need to invest abroad at all to achieve the geographical spread you desire.

1. Why invest abroad? 2. Risk and reward in foreign investment 3. Custody risk 4. Currency risk 5. UK companies are foreigners too 6. Foreign unit and investment trusts 7. Picking foreign trusts 8. How to make the most of trusts 9. Tracker funds for foreign markets 10. Foreign companies on the London exchange 11. American Depository Receipts 12. Investing in American companies 13. Investing in European companies 14. Investing in Asian companies 15. Investing in other markets 16. Dividends and withholding taxes 17. Markets go global 18. Conclusion

• Mobius on Emerging Markets