If you own shares in large UK blue chips, you are almost certainly investing abroad already. Most of them carry on a proportion of their business outside the UK, and some take in more revenues and profits from their foreign operations than their domestic ones. Here are just a few examples among major British multinationals:
| Company % of turnover by region | ||||
|---|---|---|---|---|
| UK | USA | Europe | Rest of world | |
| Glaxo Wellcome | 6 | 42 | 28 | 24 |
| Invensys | 9 | 47 | 25 | 19 |
| BAE Systems | 18 | 10 | 34 | 38 |
| BP | 31 | 45 | 6 | 18 |
| British American Tobacco | n/a | 30 | 22 | 48 |
Source: Annual reports. Figures were valid as of July 2000.
And don't think it's just large companies. Smaller companies too can 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 in 2000. This lifted the proportion of goods it manufactured in America to 78% of total turnover at that time, scarcely any of which 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 stakes in 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.
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