2021 Investment and Market Outlook Guide for U.S. Expats

2021 Investment and Market Outlook Guide for U.S. Expats

Our In-Depth Look at Markets & Investment Trends

Whether you’re craving analysis of the impact of quantitative easing on the markets in 2020 and how that may continue to unfold in 2021, or you’re curious about the trend that is Electric Vehicles, our experienced team of advisors has authored a breadth of content for U.S. Expats, which is curated in our first-ever comprehensive investment guide. Covering topics like sustainable investing and the trends in the S&P 500, this interactive PDF is meant to be a tool in your arsenal as you approach 2021. 

Q3 2020 Market Update: Dreaming of an Electric Future

Q3 2020 Market Update: Dreaming of an Electric Future

The 3rd quarter provided strong returns for risk assets across the board. In spite of continued investor anxiety about COVID and the upcoming elections, the S&P 500 finished the quarter up 8.9%, the Russell 2000 up 4.9%%, and the broad global markets up 8.1%. In the fixed income space, the US 10-year rate rose 3 basis points to 0.69%, while the US dollar continued its softening trend versus other currencies, with the DXY index down 3.6%. The Bloomberg commodity index rose 9%.

While market commentators have focused their attention on COVID and the elections, if price action is any guide, investors have their sight set on a much loftier concern: clean energy.

One of this year’s biggest market stories has been the seemingly unstoppable rise of Tesla, but the latest clean energy craze also benefited much less glamorous names such as Sunrun (up 290% in Q3), Enphase Energy (up 73% this quarter) or Vestas Wind Systems (up 52%…) . What these stocks have in common is their involvement in the production of solar, wind and other renewable energy sources. The entire sector has been on a tear: S&P Global Clean Energy Index, which tracks a basket of 30 clean energy names and can be seen as a proxy for investor sentiment, is up 47.6% in Q3 alone, outperforming even the red-hot technology sector year-to-date:

Clean energy, the new tech?

The contrast is most striking when compared to the traditional energy sector (oil and gas), which is down 20.8% in Q3 alone:

Keeping it clean.

Looking at the chart above, one might almost get the feeling that a true energy revolution is unfolding before our eyes, but that’s not quite the case: the S&P Global Clean Energy Index remains a small, niche, segment of the market. That said, the enthusiasm is real, and so is the market’s disdain for the traditional, “dirty”, energy space. 

Goehring & Rozencwajg, an investment firm specializing in the natural resources space, highlighted in their recent market report [1] that the share of energy stocks as a proportion of the total market has been declining for years and even decades. In 1980, the energy sector peaked at around 35% of the S&P 500’s market capitalization. In 2008 it was about 15%. After this year’s rout, oil and gas now represents a measly 2% of the index. 

For such a key strategic resource, it’s amazing to think that oil and gas are now little more than a rounding error in the average investor portfolio. I asked Adam Rozencwajg if they had ever seen a time when oil was this hated in their team’s 30-year experience of energy investing “no, never” he said, “I don’t think it’s been this hated since Colonel Drake drilled the first American oil well in 1858”.

The energy transition theme is not new, and could be one of mega trends that will shape the future of the global economy. Electrification (and “decarbonization”) is the idea of replacing traditional petroleum-based energy sources with clean electric alternatives: Imagine leaving your solar-powered home in the morning and driving your electric car to go work in a wind-turbine-powered office building. As far removed as it may seem from our daily realities, this is the dream of a successful transition to cleaner energy. Some have even made the case that, with a bit of help from nuclear power, America could be fully electrified right now [2][3]

The market has seen clean energy crazes before. In the heyday of the pre-2008 bull market, clean energy was one of the hot sectors. At the time, a massive influx of government and VC money sent valuations soaring. Eventually, misallocation of capital and technological shortcomings brought the “green bubble” to an abrupt end (see Juliet Eilperin’s 2012 article on the topic “Why the Clean Tech Boom Went Bust” [4], for a good post-mortem on the topic). Today, the prospect of a Biden presidency and his ambitious “Plan for an energy revolution” [5] is without a doubt contributing to the sector’s renewed hope, but real-life solutions, beyond campaign promises, will be urgently needed to sustain the trend, or the dream of an electric future will remain just that. 

Syl Michelin, CFA

[1] Goehring & Rozencwajg – Top reasons to consider oil related equities


[2] America Could Go Fully Electric Right Now – Irina Slav


[3] Mobilizing for a zero carbon America – Saul Griffith, Sam Calisch


[4] Why the Clean Tech Boom Went Bust – Juliet Eilperin


[5] The Biden plan for a clean energy revolution and environmental justice


Disclosure: The charts and any returns illustrated on this blog post are for informational purposes only. This is not a solicitation or offer to purchase any of the securities listed above. Before making any investment decisions, including buying any stocks listed above, you should consider your risk tolerance  and objectives. Check with a licensed professional before you act. Past performance is not an indication of future results.

How Does The CARES Act Impact American Expats?

How Does The CARES Act Impact American Expats?

The most important item to note for American expats is that being abroad will not disqualify you from eligibility for the Coronavirus Aid, Relief, and Economic Security (CARES) Act, should you meet the requirements. 

Americans who filed taxes abroad in 2019 (or if those have not yet been filed yet, 2018) are eligible for the tax credit. For those that earn under $75,000 in adjusted gross income for singles and $150,000 for married filers, they will receive direct payments from the government in the amount of $1,200 (single) or $2,400 (married).This will be sent via direct deposit for those that have set up ACH with the IRS, and a check can be sent to those that do not have that established. There is a phaseout for those earning above $75k/$150k, ending at $99k for single filers and $198k married.  

There are a couple of other lesser known provisions in the bill that may impact Americans abroad and we’re happy to discuss for how these changes may apply to your situation:

Required Minimum Distributions

For 2020, Required Minimum Distributions (RMDs) have been waived for all retirement accounts, including IRA, 401(k), 403(b), and 457 plans. This includes beneficiary IRAs as well. If you were in the category where you were required to take two RMDs in one year due to delaying your first RMD, you happen to be in luck – no RMD is required. 

No 10% Penalty For Early Retirees

For early retirees that qualify for “coronavirus-related distributions” (an intentionally broad definition), if you took out money prior to age 59 ½ or 55 depending on the type of retirement account, you were potentially subject to a 10% penalty. For 2020 you may now take up to $100k out of your pre-tax retirement accounts without penalty. You are still subject to reporting your distributions as income, though you are allowed to stretch the recognition of this income over three years. 

Additional Resources

As noted by our friends at American Expat Finance, a number of groups have hosted webinars discussing the various ways to apply or tax considerations involved in these “checks” from the US government.  Perhaps the most universally applicable is one hosted by the American Citizens Abroad, or ACA. As part of their newly announced Tax Cast series, President Mary Louise Serrato speaks with accountant Glen Frost to discuss the specifics of these benefits for Americans abroad from a tax perspective. The AARO (Association of Americans Resident Overseas) also hosted a webinar for its members

Keith Poniewaz

Schwab Closing Accounts in Italy and France

Schwab Closing Accounts in Italy and France

In addition to our announcement regarding the account closures for Italy and France for retail customers, we wanted to include an additional FAQ regarding account closures for Charles Schwab retail clients.

Q: Why is Charles Schwab UK closing accounts for clients in France and Italy?

A:  The initial claim is Brexit.  While Brexit is not yet a fait accompli, indications are that it will mean the end of the passporting regime, which allows for companies registered in one EU country to be registered in all of them. However, it is also likely that Schwab is– in the wake of their decision regarding PRIIPs and KIIDS and the decision to no longer sell ETFs to EU-based clients (which was much later than other brokerage firms)– taking a closer look at European compliance and realizing that it is more complicated than they’ve originally anticipated. 

Schwab is more flexible than many U.S. based brokers in their account closures as they are not yet at the stage where they are announcing they will close all accounts in a period of time, but they are now limiting actions in the accounts to sales and liquidation in terms of moving out the accounts by December 31.

Q: What can I do, where can I open accounts?

A: The number one resource for Americans abroad in our opinion should be Interactive Brokers, which is a truly international brokerage. The drawbacks of Interactive Brokers– as we discuss in our piece on the topic— are that it tends to be a bit more complex than a standard brokerage interface and generally the customer service is not as strong as other retail brokerages. That said, IB has made strides on both fronts and will likely continue to improve.  

If you split time between the EU and the United States, maintaining a U.S. address is the easiest solution as well. However, individuals should resist those Advisors who push them to keep an American address or encourage other schemes to subvert U.S. and EU rules.  

Q:  How do we know that this won’t happen to IB clients?

A: As a truly global brokerage– rather than a US brokerage serving international clients– the incentives for IB to comply are much greater.  First, they are generally listed as members of international exchanges in the various countries where they do business, so they were less reliant on “passporting” than Schwab. Additionally, IB has already taken steps to move operations to Lichtenstein for those clients in the European Union.

This issue is still ongoing and we will update clients and the public as we learn more. For investors that would like to discuss their specific situation, we welcome you to schedule an initial no-cost, no-obligation consultation with our Director of International Advisory services, Keith Poniewaz. Keith works with U.S. expats on financial planning and wealth management. You may also email Keith as well.

Schwab no longer selling U.S.-based ETFs to Clients in the European Union: Our FAQ

Schwab no longer selling U.S.-based ETFs to Clients in the European Union: Our FAQ

Frequently Asked Questions as interpreted by Keith Poniewaz, Director of International Advisory Services at Walkner Condon Financial Advisors 

This week, Charles Schwab announced that it will no longer be selling Exchange Traded Funds or Exchange Traded Notes to clients who are resident in the E.U.: “Beginning September 19, 2019, Schwab clients who are residents of the E.U. will no longer be able to purchase U.S.-registered exchange-traded funds (ETFs) and exchange-traded notes (ETNs)…This restriction results from regulatory changes and affects all residents of the E.U.”

As we noted back in February 2019, this is unsurprising and we have been preparing our clients for this, as Schwab has been a hold-out on these regulatory restrictions. Other brokerages which have worked or work with expats started complying with these restrictions as early as last January. The restrictions are related to MiFID II, which are sweeping regulatory changes to the financial industry. These particular regulations affect what are called PRIIPs (or Packaged Retail Investment and Insurance Products) and KIIDs. As we have written on and been cited on these regulations extensively in order to help investors understand their options, we’ve provided the following FAQ as a service along with links to our relevant white papers and articles. In particular, readers should look at our white paper “Are you KIDing Me? PRIIPs, KIDs and new obstacles for Americans Abroad” and a previous and more technical FAQ on the subject “It’s 2019, Do You Know Where Your KIDs Are?


Any investor residing in the European Union, American or otherwise. 


We have been warning Americans abroad about this possible complication for quite some time, and we’ve written a number of blog posts on the topic since January of this year: 


We’ve also published articles on the topic: 



First, there is no need to panic– any existing positions you hold will be maintained. Your account will not be closed. Everything will remain as is. However, going forward there will be certain restrictions on what you can buy and sell:

As Schwab themselves put it in their letter: 

  • You will be able to maintain any existing U.S. ETF or ETN positions you hold, but you will not be able to purchase more.

  • Dividends can no longer be reinvested in U.S. ETFs or ETNs.

  • You may liquidate U.S. ETFs or ETNs, but you will not be able to repurchase them.


While European-based clients can now buy select UCITs (the EU equivalent of ETFs), these are considered Passive Foreign Investment Companies in the United States and are taxed at an extremely high rate if they are held in taxable brokerage accounts (more on that in a blog post by The CPA Journal). Additionally, the filing requirements are quite substantial. More details about PFICs can be found in our Expat Investing Guide.


First, Schwab is EU-regulated. They register with the Financial Conduct Authority in the UK.  Moreover, these regulations are “extra-territorial,” which means that it doesn’t matter where the company performing the business is registered, simply that they are helping a client in the European Union. See the insights of several top international law firms and investment banks who note that the law has extra-jurisdictional reach: KL MillerMorrison FoersterBrown Brother Harriman amongst others.  


It is important to note that this regulation applies to where the client resides and doesn’t exempt Advisors: as the Financial Conduct Authority’s website indicates in their notes on the regulations, it doesn’t simply apply to brokerages or custodians, but anyone offering packaged investment products in the European Union: “The KID Regulation applies to all manufacturers (or remanufacturers) and financial intermediaries (including advisors) who distribute ‘packaged retail and insurance-based investment products’ (or PRIIPs) which are invested in by retail clients.”  It is uncertain as to whether there are carve-outs for Registered Investment Advisors (RIAs).


First, investors can continue to purchase individual securities in both the U.S. and abroad.  Thus, a simple solution is to assemble a diversified portfolio of individual stocks and bonds. There are a variety of methods of doing this. We have discussed the various options in a podcast, “The Future of Taxable Investing.” Additionally, we have discussed the options available to Americans abroad in a blog post perhaps inopportunely titled “More than One Way to Skin a Cat.” Finally, we recently published a post regarding SMAs as the best tool for Americans investing abroad since it allows them more precise tax management, helping them reduce their significant tax bills.

Ultimately, Americans should investigate our white paper on investment strategy for Americans abroad.


We can’t say before discussing your situation and what you would like to accomplish. Set up a no-cost, no-obligation appointment with us to explore your options.

Here is a link to our disclosures.