The United Kingdom has the sixth-largest national economy by GDP, and is a highly developed social market. Composed of England, Wales, Scotland, and Northern Ireland, the UK is an extremely globalized economy - attracting the second-largest inward foreign direct investment (FDI), and the third-largest outward FDI. The United Kingdom is highly dominated by the service sector, which contributes to ~80% of its GDP; moreover, London is the one of the largest financial centers in the world, and Britain has the second-largest national aerospace industry.
Founded in 1571, the London Stock Exchange (LSE) is one of the oldest stock exchanges in the world. It is the primary stock exchange in the United Kingdom, and the largest exchange in Europe. The LSE boasts a highly international presence, with thousands of companies from over 60 countries listed. The LSE easily rivals the NYSE in terms of market exposure, trade volume, market capitalization, and access to capital and liquidity.
Some of the largest companies listed on the London Stock Exchange are Royal Dutch Shell, Toyota Motor Corporation, HSBC Holdings, Boeing, AstraZeneca, and BP.
The FTSE 100 Index (or Financial Times Stock Exchange 100 Index), colloquially known as the ‘Footsie’, is a share index of the 100 largest companies listed on the LSE by market capitalization. It is often seen as a barometer of prosperity for businesses governed by UK company law.
The London Stock Exchange opens at 8:00AM and closes at 4:30PM local time, with no gap for lunch break.
Investing in U.S. stocks from the United Kingdom is fairly straightforward, and there are a number of options you can pursue.
Avenue 1: Trade ETFs listed on the LSE with U.S. exposure
There are a number of Exchange-Traded Funds that trade on the LSE with over 99% exposure to U.S. markets:
In the United Kingdom, some of the primary ETF providers are iShares, Vanguard, and ETF Securities.
Avenue 2: Open an Account with an International Broker
Another option is to open an account with an international broker that is supported in the United Kingdom. A few examples included below - this is not exhaustive and investors should do due diligence before deciding on a specific option.
Avenue 3: Open an Account with a UK Broker with Access to U.S. Stocks
There are a variety of UK-based international brokers that offer investors access to the U.S. stock markets. A few examples include:
Given the size and influence of the UK's financial sector, investing in the UK markets can be an excellent way to diversify and potentially strengthen the performance of your portfolio.
Avenue 1: Invest in ADRs, or American Depository Receipts
UK securities trade on American Stock Exchanges (such as the NYSE or NASDAQ) in the form of American Depository Receipts, or ADRs. ADRs are essentially stocks backed up by a foreign company, which are then held in trust by a U.S. bank. Their shares can be traded OTC (over-the-counter), and can be sponsored or unsponsored.
ADRs can be purchased on a number of platforms, such as Robinhood (commission-free), Fidelity, and Charles Schwab.
Avenue 2: Invest in ETFs with exposure to the UK markets
Another option is to invest in ETFs with exposure to the UK markets, which trade on your country’s stock exchange. Examples of such ETFs include:
Avenue 3: Invest through a brokerage that can access the London Stock Exchange
Finally, a more direct approach is to directly purchase securities on the London Stock Exchange; U.S. brokerages that offer access to the LSE include Interactive Brokers and eTrade.
Alternatively, you can open an account directly with a UK broker, such as Banco Santander's Abbey Sharedealing and Barclays Stockbrokers. That said, you should be keenly aware of any tax implications and costs before investing in the LSE through a broker service.