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In recent newsletters, we have discussed the growing significance of lunar developments, and it appears that NASA's recent announcement corroborates this narrative. The agency's conceptual 3-D renderings of a lunar residence by 2040 offer a glimmer of optimism in what has otherwise been a challenging year for the real estate sector. The conventional real estate market has been facing a series of adversities, including elevated property prices, escalating interest rates, and region-specific declines in demand owing to the rise of remote work. Further exacerbating the situation are accounting scandals that have severely affected the Chinese real estate market. In light of these multi-faceted challenges, we have made the strategic decision to remove real estate from its previously core position within our investment portfolios. A historical method of timekeeping by our ancestors, this October, we welcome the Hunter's Moon, which followed the Harvest Moon in September. We will spend part of this newsletter to better understanding the global harvest festivals and how those countries central banks can help us hunt for opportunities! Not All Harvest Festivals are Created Equally France "In the heart of Montmartre, where art meets tradition, the Fête des Vendanges celebrates not just the harvest of the vine, but the richness of life itself. As we raise our glasses under the sparkle of Parisian fireworks, let us also toast to a more promising economic landscape, marked by a lower inflation rate of 5.7%. Germany The tradition of Erntedankfest honours the harvest with a blend of faith and festivity, this year's celebrations may carry a more sombre tone. Labelled as the 'sick man of Europe' by The Economist, the nation is grappling with an inflation rate of 6.4%. United Kingdom The Harvest Festival traditionally celebrated on the Sunday nearest to the Harvest Moon. As churches and schools join in decorating spaces and collecting food for those less fortunate, this year's celebrations may also serve as a moment of reflection. With an inflation rate of 6.7% and some of the highest interest rates in the Western world, the British populace faces the prospect of a challenging winter ahead. Japan The tradition of Niiname-sai provides a moment to give thanks for the year's harvest, connecting both the celestial and the earthly through offerings of newly harvested rice. As even the Emperor partakes in this solemn Shinto ceremony, the ritual underscores the nation's deep-rooted respect for the land and its bounty. Meanwhile, in the economic sphere, the Bank of Japan's policy of maintaining short-term interest rates at -0.1% and capping 10-year yields around 0% serves as a stark contrast to other nations grappling with high inflation. As efforts continue to reach a 2% inflation target. This negative interest rate has led the Topix market to being the top performing market globally in USD terms at 25.8%! India India has a range of harvest festivals, given its diversity and varying agricultural practices across states. Prominent among these are Pongal in Tamil Nadu, Makar Sankranti in various parts of India, and Baisakhi in Punjab. These festivals are celebrated with various rituals, fairs, and India had much to celebrate with an expanding economy, and a stock market that was up 8.7% at the writing of this newsletter. Activity in Canada might cause some issues regarding this near term outperformance. United States The timing of Thanksgiving has historical rather than agricultural origins. President Abraham Lincoln proclaimed a national day of "Thanksgiving and Praise to our beneficent Father who dwelleth in the Heavens," to be celebrated on the last Thursday in November, during the midst of the American Civil War in 1863. The aim was to foster a sense of national unity. Before Lincoln's proclamation, Thanksgiving was celebrated on various days in different states. The choice of the fourth Thursday was later ratified by Congress in 1941, solidifying its place on the national calendar. The late November timing makes Thanksgiving one of the last harvest festivals of the year, positioned closer to the onset of winter rather than the end of the actual harvest season. Despite its late timing, it serves similar purposes to other harvest festivals: celebrating community and giving thanks for the bounty of the year. Hopefully, these views of unification will be remembered as we navigate an already intricate economic landscape. The United States is confronted with yet another budgetary deadlock. With a looming deadline of November 17th, just in time to ruin our favourite American harvest festival and no apparent resolutions on the horizon, the impasse adds another layer of complexity to fiscal planning and market stability. Compounding this challenging scenario, we are witnessing a surge in oil prices, attributed to reduced supply from major producers Russia and Saudi Arabia. The prices are potentially nearing the $100 per barrel mark, a development that could have far-reaching implications for both consumers and investors. This escalation in oil prices coincides curiously with ongoing discussions to curtail military spending related to the situation in Ukraine. The confluence of rising interest rates and escalating oil prices imposes a de facto tax on consumers, exerting downward pressure on demand. In economic theory, a decrease in demand would generally lead to a correction in prices, potentially stabilizing or reducing oil prices in the near term. However, given the complexities of the current situation—including geopolitical tensions and supply chain constraints—this rebalancing may lead to a cold and hard winter for some. Inflation and interest rates have a complex but interconnected relationship, often influenced by the broader economic environment and the specific policy objectives of central banks. Below is an explanation of how they generally interact, followed by an overview of what central banks in the U.S., U.K., Europe, Japan, and China aim to achieve. Correlation of Inflation Rates to Interest Rates Inflation Up, Interest Rates Up: Central banks often increase interest rates to combat high inflation. Higher interest rates typically lead to lower spending and investment, cooling the economy and thereby reducing inflationary pressure. Inflation Down, Interest Rates Down: In a low-inflation or deflationary environment, central banks may reduce interest rates to stimulate spending and investment, aiming to increase inflation to a target level. Objectives of Central Banks in Different Regions United States - Federal Reserve The Federal Reserve aims for maximum employment and stable prices. It uses the federal funds rate as its primary tool and also engages in open market operations, among other strategies. United Kingdom - Bank of England Similar to the Federal Reserve, the Bank of England targets an inflation rate of 2%. It uses the Bank Rate as its primary tool and engages in quantitative easing to stimulate or cool the economy as necessary. Europe - European Central Bank (ECB) The ECB aims for price stability, targeting an inflation rate of below, but close to, 2%. It uses main refinancing operations, among other tools, to influence interest rates across the Eurozone. Japan - Bank of Japan (BOJ) The BOJ has a unique challenge of combating prolonged deflation and aims for controlled inflation. It has resorted to unconventional policies like negative interest rates and yield curve control to stimulate inflation. China - People's Bank of China (PBOC) The PBOC has multiple objectives, including economic growth, full employment, and price stability. Unlike other central banks, the PBOC isn't independent but operates as part of the government. It employs a range of tools, including reserve requirement ratios and open market operations, to control money supply and influence interest rates. The yield curve is a graphical representation that shows the relationship between interest rates and the maturity of bonds. Usually, the curve slopes upwards, meaning that longer-term bonds offer higher yields than shorter-term ones. This is because investors generally expect higher returns for taking on the greater risk associated with holding bonds over a longer period. We have an inverted yield curve, which happens when short-term interest rates are higher than long-term rates. This is considered unusual and is often interpreted as a sign of economic uncertainty or even an impending recession. When the yield curve inverts, it means investors are seeking the safety of long-term bonds, driving up their prices and lowering their yields. Our strategy of continuing to buy short-term bonds (under a one year duration) is quite conservative. We are also increasing our positions to a higher allocation of fixed income from alternatives and global equities at this point. A normalizing yield curve suggests that investors are growing more confident in the economy's long-term prospects, moving away from the safety of long-term bonds. Central banks like those in the US, UK and the Eurozone appear to be taking a cautious approach, holding off on immediate rate hikes while monitoring upcoming inflation data. This could indicate a level of economic uncertainty that makes short-term bonds a prudent choice. In September, the broader financial market grappled with the prospect of a sustained period of higher interest rates, triggered in part by Crude Oil prices nearing the $100 per barrel threshold. This sentiment impacted multiple asset classes, leading to a general market pullback. The renewable energy sector was notably affected, facing challenges from both the macroeconomic environment and industry-specific factors. Elevated interest rates have a detrimental effect on the balance sheets of emerging companies in this sector, making it more expensive for them to borrow and finance growth. Concurrently, the industry is witnessing a decrease in demand for solar and wind projects. This decline can largely be attributed to diminishing financial support for such initiatives, resulting in a tepid pipeline of upcoming projects for companies dependent on both public and private sector energy infrastructure investments. In our latest market overview, large-cap growth equities continue to dominate, with Latin America (Lat-AM) and the United States showing particularly strong regional performance. One key driver behind the robust showing in Lat-AM is the prominence of the carry trade, specifically JPY/MXN, which has been highlighted by Bank of America as the "world's favourite carry trade this year." This has resulted in an influx of "hot capital" into the region, creating a ripple effect that has also boosted the equity markets. Additionally, the relative strength of Lat-AM can be attributed to the region's advanced position in the interest rate cycle compared to Western nations. Latin American countries were quicker to adjust interest rates, and their inflation rates have remained largely in line with central bank targets. This advantageous situation has made the region less susceptible to the broader inflationary pressures affecting other parts of the world. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

Representatives Don Beyer (D-VA) and Dina Titus (D-NV) introduced the Tax Simplification for Americans Abroad Act of 2023 (H.R.5432) on September 13, 2023. While limited in its scope, it makes important changes that simplify tax return filing requirements, expand the type of income which can be excluded from tax and make detailed changes in FBAR and Form 8938 reporting rules. In general, the Tax Simplification for Americans Abroad Act (“TSAA”) mandates that a simplified income tax form be made available for certain taxpayers residing abroad, expands for eligible individuals the scope of income allowed to be excluded from tax under existing section 911 (Citizens or Residents of The United States Living Abroad) and changes the Bank Secrecy Act/anti-money laundering rules and the tax reporting rules enforced by Form 8938 (Statement of Foreign Financial Assets). Use of the new simplified form is not mandatory; individuals can choose not to use it. The BSA/AML and Form 8938 rules are applicable not just to individuals residing abroad but to all individuals. In a September 13, 2023 Press Release, the two sponsors said: Today, U.S. Representatives Don Beyer (D-VA) and Dina Titus (D-NV) announced the introduction of the Tax Simplification for Americans Abroad Act, legislation to help American taxpayers living overseas comply with their U.S. tax obligations by calling on the IRS to create a short form certification for Americans living abroad who owe no U.S. tax and earn below $400,000 annually. The bill would expand the Foreign Earned Income Exclusion to include additional types of income that are earned overseas like pensions and distributions from retirements funds. It would also consolidate duplicative and burdensome forms that taxpayers must file under the Foreign Account Tax Compliance Act (FATCA) and the Bank Secrecy Act. “Ordinary Americans living abroad are often overlooked when U.S. tax policy is written, which can make it extremely difficult and expensive for them to navigate the tax system,” said Rep. Don Beyer. “I saw a record-breaking number of Americans renounce their citizenship when I served as the U.S. Ambassador to Switzerland, and the needless complexity of the U.S. tax code was often cited as a reason. This bill would help ordinary Americans fulfill their obligations without having to retain an expensive accountant to certify that they owe no U.S. taxes and remove some of the frustrations faced by Americans living abroad who just want to follow the law.” “Americans abroad face a uniquely complex set of reporting requirements that we here at home aren’t subject to. I’m joining Rep. Beyer to create a simplified income tax return for taxpayers living abroad because Americans shouldn’t have to jump through extra hoops simply because they reside or work overseas,” said Rep. Dina Titus, Chair of the Americans Abroad Caucus. “This legislation is an important step in the right direction. It greatly simplifies things for many Americans abroad. Much remains to be done, but this is a step that we have all asked for for a long time. Retirees living overseas will be especially interested in the details,” said Marylouise Serrato, Executive Director, American Citizens Abroad. Click for a Technical Explanation of the Bill and a copy of the Bill itself. Join our write-in campaign to support Congressman Beyer's efforts. Click here for the original article from American Citizens Abroad (ACA). #Tax #Legislation #AmericanTax #AmericanExpats DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

Today, on August 30th, 2023, we witness a celestial rarity: a Blue Moon. While many know the term "once in a blue moon" to express a rare event, not everyone realizes its astronomical significance. A Blue Moon refers to the second full moon in a calendar month, gracing our skies approximately once every 2.7 years. Just as a Blue Moon is unusual, we find ourselves in an unexpected position in the real estate market, often considered a once-in-a-blue-moon situation. Historically, real estate was viewed as a primary asset class in the 1960s. In those days, the average price of a home was less than $10,000, a sum comparable to today's car prices. The escalating real estate prices from the 1980s to the present day weren't purely a result of the appeal of bricks and mortar but were primarily driven by plummeting interest rates. As these rates reduced, the allure of owning property grew. However, as the tides of time change, so do financial climates. With mortgages now rising above 6% in many parts of the developed world, we are seeing unprecedented challenges in the realm of real estate. This has tested its mettle as an asset class, prompting much reflection and analysis. Given the current trajectory and market dynamics, we have taken a cautious stance, i.e. we are choosing to watch from the side-lines, hoping that our apprehensions prove misguided for the sake of the broader economy and that we regret missing any potential growth. In other words, we’d rather miss the boat than be caught in the middle of a storm. The Blue Moon Phenomenon: China's Unexpected Stagnation China, renowned for its millennia of rich cultural history and traditions, has always been deeply entwined with the movements of the cosmos. Celestial events are not just observed; they are revered, often signifying divine interventions or predictions for the days to come. While the term "Blue Moon" might be foreign to the Chinese lexicon, the current economic trends seen in China mirror this rare turn of events. For decades, China's astonishing economic growth has been a given. It's the dragon that has soared higher each year, astonishing the world with its relentless pace of development. Yet, the present lack of growth is a 'blue moon' event in China's recent economic history. Source: Visual Capitalist Several factors have contributed to this anomaly. A prominent one is China's recent tensions with Japan, which have created economic and political ripples. But, perhaps even more significantly, China's real estate problem has begun casting shadows beyond its borders. These tremors were most pronounced when Evergrande, a real estate behemoth, declared Chapter 15 bankruptcy in the USA. This move essentially shielded its international assets from the clutches of US debt holders, signifying a vulnerability many had not anticipated from such a giant. Moreover, the wounds of the global pandemic and the stalling pace of recovery post-COVID have only exacerbated these concerns. These uncertainties have made us wary of China's broader market landscape. However, every cloud has a silver lining. China's technology sector, brimming with innovation and ambition, seems to be that shining beacon amidst these cloudy times. Interestingly, while many view the potential governmental division of major tech companies with apprehension, we see opportunity. This restructuring could decentralize power, minimizing monopolistic control by large entities and fostering an environment where growth and innovation can thrive. Just as the blue moon shines brightly amidst the regular phases of the moon, we are optimistic that China's technological prowess will shine, offering avenues of growth even in these challenging times. Navigating Interest Rate Dynamics: A Tale of Two Nations In the complex landscape of global financial markets, interest rates serve as one of the most potent tools for central banks to influence economic growth, inflation, and currency values. The strategic management of these rates can catalyse prosperity, while missteps can precipitate economic stagnation or even crises. Recently, the divergent paths of interest rate policies in the UK and China offer a fascinating study in contrast. United Kingdom: The Interest Rate Challenge Post-Brexit and amidst the ongoing repercussions of the pandemic, the UK has faced an uphill battle in stabilizing its economy. Historically, double-digit interest rates in the UK have been tools to combat high inflation and stabilize the pound. Still, the ramifications of these high rates are evident in the current housing market. Rent and mortgage costs have surged at unprecedented levels, pushing the dream of homeownership further out of reach for many. While the Bank of England, with the newly appointed consultant Ben S. Bernanke, harbours ambitions of trimming the inflation rates down to 2%, the pathway there is fraught with challenges. The twin pressures of ensuring economic growth while managing inflation expectations demand a delicate balancing act. Reducing rates too swiftly might overstimulate the economy, risking runaway inflation. Conversely, maintaining high rates can stymie growth and burden borrowers. China: The Deflationary Spectre Conversely, China's economic conundrum centres on an entirely different concern: the looming shadow of deflation. Traditionally an economic powerhouse, China's recent slowdown in consumer spending has raised eyebrows. A populace hesitant to part with their yuan means less consumption, which, in turn, can lead to falling prices or deflation. This spiral can deter businesses from investing due to anticipated lower returns in the future, leading to reduced economic activity and potential job losses. To counteract this, Beijing may opt to reduce interest rates to make borrowing cheaper, aiming to stimulate spending and investment. However, this isn't a guaranteed remedy. The psychological factors driving consumer restraint, including concerns over the property market and broader economic uncertainties, may not be quickly allayed by rate adjustments alone. An Overview of the Current Fixed Income Landscape The intricacies of the global fixed-income market often function as a barometer for the broader economic climate, reflecting nuances that might not be immediately discernible in more volatile asset classes such as equities. The current state of these markets presents a mix of challenges and opportunities. Inversion and Its Implications Traditionally, a yield curve inverts when short-term bonds yield more than their long-term counterparts. This inversion can be seen as a warning sign, indicating a potential economic slowdown or even recession. However, from an investor's vantage point, this scenario can also present opportunities, especially in an environment where higher rates are prevalent. For investors, the silver lining in this situation is the newfound ability to purchase bonds in domestic currencies at more attractive yields than before. As central banks in various regions navigate the complexities of their respective economies, the subsequent adjustments in interest rate policies create pockets of value in the fixed-income world. Strategic Positioning With the current landscape in view, certain maturity periods are emerging as sweet spots for bond investors: US & UK Bonds: A 6-month maturity seems optimal. Given the economic uncertainties and central bank policies in both these regions, this duration strikes a balance between capturing higher yields and managing the risk of potential rate changes. European Bonds: A shorter 3-month maturity is favourable. Europe's unique economic challenges and the monetary policies of the European Central Bank (ECB) make this duration an attractive proposition for investors seeking yield while minimizing exposure to interest rate volatility. In the current climate, it's prudent for us to keep our bond duration relatively low, reflecting a cautious approach to manage interest rate risk. However, the market is ever-evolving. As the yield curve potentially begins to normalize and move away from its inverted state, opportunities to extend bond maturities and lock in longer-term rates will emerge. This will provide the opportunity for stable, attractive yields while also hedging against future uncertainties. We will be discussing this and more in our upcoming Q3 economic update on 4th of October 2023. You can sign up to the webinar here. On a lighter note, as the summer days shorten and we transition into the autumn months, we hope that you've enjoyed a season of joy, relaxation, and warmth. Though financial markets have remained relatively uneventful this summer, history tells us that September can be a turbulent month. But regardless of what the markets have in store, we remain committed to guiding and advising you with the utmost dedication. Wishing you clear skies and smooth journeys, both in life and investments. Best regards, Brian Dunhill DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

"Don't let your mouth write no check that your tail can't cash." - Bo Diddley, blues legend The importance of financial planning for expats whose finances are complicated by debt can’t be overstated. Types of debt many expats often incur include student loans, credit card debt, and bank loans. Managing and paying off debt is essential though, as not doing so can jeopardize your ability to achieve your long-term financial ambitions. In this article, we’ll outline some strategies to help you manage your debts. Specifically, in this article, you’ll learn about: • Strategies for repaying student loans • Budgeting and planning your outgoings • Prioritizing repayments and restructuring debts • Whether to pay down debt or invest Strategies for repaying student loans Most people borrow money to pay for college. When it comes to repaying your student loans, the first step is to collate all the information about your loans, including how much you owe to which lenders, along with the repayment terms. Then, find out about the different repayment options. There are numerous student loan repayment options available, and you should explore which best suits you with your financial advisor. You should also consider consolidating or refinancing your loans, as this could mean paying a lower interest rate and repaying the principal sooner. If there’s a grace period before you have to start making repayments anyway, you could consider making advance payments on your loans during the grace period, as repaying some of the principal early means less interest will accrue, reducing the amount you’ll have to repay overall. It will, of course, help to make overpayments if you can. These could be regular small overpayments or substantial payments when you receive a tax refund or if you inherit money, for example, which will pay down the principal more rapidly and shorten the loan’s overall duration if you can. Late payments can impact your credit score, so avoid paying late fees and credit score issues by setting up your loan payments to be automatically withdrawn from your account each month. Finally, there may be a forgiveness program available. Expats can, in theory, access Biden’s Student Loan Forgiveness Plan if or when it’s eventually approved. As another example, the Public Service Loan Forgiveness (PSLF) program is intended to provide student debt relief to those working in the public sector. Budgeting and planning your outgoings The last thing you want is for debts to overwhelm you. An experienced expat financial advisor will help you map out your financial flow and identify potential issues. To give your advisor the whole picture, you’ll need to provide all pertinent documents relating to your financial circumstances, such as: • Recent tax returns • Bank statements • Credit card bills • Loan installment statements • Pay stubs • Loan contracts • Anything else that can affect your financial condition The aim is to allow your advisor to help you budget your outgoings effectively as part of a longer-term plan to manage and repay your debts. This usually entails cutting back on any unnecessary spending so that extra money can be found to pay off your debts. Prioritizing repayments and restructuring debts It makes sense to prioritize repaying debts with the highest interest rates, which are most often credit card debts, and most advisors will create a repayment plan based on this strategy. This way, interest added to debts is reduced quickest, although you mustn’t miss minimum repayments on other loans to achieve this. Debt restructuring meanwhile is a strategy used by individuals (and also businesses) to avoid defaulting on debts, as defaulting has a negative impact on your credit score and your ability to borrow in the future. Debt restructuring is often used when a debtor is in financial trouble, perhaps because unrelated circumstances have made it difficult to fulfill their repayment commitments in their current form or terms. It entails looking for a lower market interest rate and extending the time in which the loan amount is to be repaid. As an example, if you have equity in your home, it might make sense to take out a second mortgage at a lower interest rate than your other debts to enable you to pay them off. It may be wise to take out life insurance, too, to cover your heirs from having to take on your debts in case you die before you’ve repaid them. Whether to pay down debt or invest If you find yourself with extra cash, you should consider the opportunity cost of either paying off debts or investing. There can be good reasons for doing both, but if you are faced with the choice, there is a simple formula you should aim to follow. The formula is to invest if doing so will allow you to earn a higher return than the interest rate your loans are currently accruing. However, unfortunately, while the formula is simple, working out whether it will apply often isn’t simple, as investments often perform better or worse than expected. The first consideration is always that if you have high-interest debts such as credit card debts, you should repay these before investing, as it’s unlikely that any investment will yield a greater return than the costs you incur each month with these debts. Another reason it’s worth ensuring that your debts are well managed before using excess income to invest is to maintain your credit score, which is crucial if you want to borrow money in the future for something like a mortgage. Otherwise, you’ll have to pay higher interest rates. Your credit score can also have an impact on other facets of your life, such as insurance costs, whether a landlord will let you rent an apartment, and even whether or not an employer will hire you. For this reason alone, paying off your debt before investing can be the right decision. Conversely, if your debts are well-managed or consolidated with a low-interest rate, it can make more sense to start investing your excess income with the aim of realizing a greater gain on your investments than the interest rates you are paying on your debts. In this way, if in the future you sell your investments to pay down your debts, you’d realize a net gain rather than a loss. Ultimately, it will depend on your circumstances, and your financial advisor will guide you through whether to repay debt or invest as part of your wider financial planning. Wrapping up While debts can sometimes seem overwhelming, with good advice, a good plan, and some discipline sticking to the plan, they can more often than not be managed in a way that doesn't inhibit your long-term financial goals. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

“The most important thing is to invest. The second most important thing is to buy well.” - Naved Abdali Financial markets can be extremely volatile, with shares, exchange rates, and commodity prices fluctuating dramatically based on just a story in the news. As a result, managing your investments and keeping up with events that could impact them is time-consuming. Some investors turn to index trackers or mutual funds, however many discerning investors turn to a discretionary fund manager to take on the burden of constantly monitoring their portfolio and the many factors that could affect it, applying their experience and expertise to attain your goals. Discretionary fund managers make investment decisions based on their client's wishes, often set out in an agreed Investment Policy Statement (IPS). An IPS is a detailed document that outlines an investors’ preferences, goals, and risk-return tolerance. Because preferences and tolerances are personal and can change over time, the document should be dynamic and adaptable. Trusting someone with managing your investments is a big step, but the benefits can also be significant in terms of protecting and growing your portfolio. In this article, you’ll learn about the following topics: • What is Discretionary Fund Management? • What are the benefits of Discretionary Fund Management • Should you use a discretionary fund manager? What is Discretionary Fund Management? Discretionary investment management refers to an individual or team making asset buying and selling decisions at their discretion on your behalf. For example, a discretionary fund manager usually decides which specific securities to hold in a portfolio. It is a form of investment management in which a wealth manager or financial advisor makes all purchases and sales for you. Their investment decisions, however, are based on a plan that you have agreed together with them. Discretionary accounts are typically actively managed, with the manager regularly buying and selling stocks to maximize stock market gains. While some discretionary managers take a more passive approach, investing in funds for example, this approach is less common. Discretionary fund managers often use a structured group approach. This means that instead of necessarily making individual client-based investment decisions, they select a few assets to invest in across all of their clients. How much they invest in each of those securities is determined by each individual client’s risk tolerance. As long as it is consistent with the client's risk level and financial plans, discretionary fund managers can diversify a portfolio and into any type of investments including stocks, bonds, real estate, and financial derivatives. What are the benefits of Discretionary Fund Management? Discretionary fund management relieves expat investors of the responsibility of making day-to-day investment choices, which can be better made by an expert portfolio manager who is constantly monitoring company information and factors that can cause market fluctuations. Delegating investing to an experienced manager frees your time to focus on other things, with the knowledge that the portfolio is being monitored and handled by an expert in the field. Because discretionary managers usually charge fees based on performance or portfolio value rather than based on transactions, discretionary fund management aligns both your and the investment manager's interests; that is, if the portfolio grows due to successful discretionary management, the advisor is compensated with higher fees. This reduces the advisor's desire to "churn" the account to earn more compensation compared to a transaction-based investment model. In summary, benefits of discretionary fund management include: 1. Ease As an investor, you don’t need do not need to waste time researching or worrying about the performance of your investments. 2. Incentivized to grow your portfolio When investment managers are compensated based on performance, they strive to maximize growth for you. 3. Benefiting from professional advice Investment managers are typically professionals with specialist knowledge and insights about financial markets and investing. 4. Scale economies Investors effectively pool their capital and so gain access to economies of scale through lower trading costs and block trades carried out by the fund manager 5. Flexibility Another benefit is that discretionary fund managers can adjust their investments without seeking permission from the investors every time, which should allow them to act quickly if they see a market opportunity. 6. Personalized service Compared to investing in funds, you receive a more personalized service that includes high-quality financial planning and investment management designed to achieve your goals. A discretionary fund manager is analogous to a surgeon in an operating room. Though the surgeon performs the surgical procedure, they are assisted by anesthetists, nurses, and other specialists. Similarly, most discretionary fund managers use researchers and an operations team to assist them, as well as having access to the most up-to-date information, reports, and analysis, just as a surgeon does to ensure a successful operation. Should you use a discretionary fund manager? While the decision of whether to use a discretionary fund manager will always be personal, it should be part of a discussion with your expat financial advisor. The most important consideration is whether doing so will better allow you to achieve your financial goals. Many expats choose to invest part of their portfolio in funds, and part with a discretionary manager, to reduce the risk while also aiming to outperform the indices. This is called a core and satellite strategy. Ultimately however, the more experience you have, the more likely you are to make profitable investment decisions. A good discretionary fund manager will likely have witnessed numerous economic cycles, business developments, and political and policy changes. This experience can have a material impact on your portfolio performance, as they bring their own expert knowledge aligned with access to the data and information to which they have access. Alternatively, many expats consider a robo investor solution, such as DF Direct. Ultimately, the choice is personal. Wrapping up Discretionary investment is a form of investment management that removes you from day-to-day decision-making. Instead, a financial planner or other advisor manages your investments following a predetermined plan. Discretionary fund management fees vary depending on with whom you collaborate and how you allocate your money, but you should assume on paying at least 1% of your portfolio value. You should however hope to benefit by more than this due to the benefit of their expertise. While there are now more affordable investment options, such as robo-advisors, they don’t provide the same experience and ability to react to market and socio-political developments. Before making decisions about investments that could significantly impact your portfolio performance and overall investment objectives, always discuss your ideas with your financial advisor to ensure that you understand all the variables, risks and possibilities. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

“My theory of risk is that it is better to take a substantial holding of what one believes in than scatter holdings in fields where one has not the same assurance.” - Allen C. Benello Managing risk is a key consideration when investing, and all investors have their own perceptions and opinions as to how to approach and mitigate it. We’ve already covered some strategies to reduce risk in another article, and explained why higher risk is often equated with higher possible gains, and vice versa. In this article, we’re going to look at diversification, a common portfolio building strategy to reduce risk, and also the opposite strategy, taking a concentrated position, and the pros and cons of both. In this article, specifically, you’ll learn about the following: • What is a concentrated position? • Pros and cons of holding a concentrated position • What is portfolio diversification? • Diversification strategies What is a concentrated position? If a stock or asset makes up the majority or a sizable portion of an investor’s holdings, the stock or asset is said to have a concentrated position. Taking a concentrated position can affect the portfolio's overall returns and performance. Investors take concentrated positions in assets for a variety of reasons, including emotional considerations, stocks given as part of compensation, or due to strong convictions or a particular interest in a specific stock (or other asset). A stock is typically considered concentrated (or ‘overweight’) if it makes up more than 10% of a portfolio. Similarly, a portfolio with a limited variety of securities is considered concentrated, as it does not offer sufficient diversity. The main advantage of taking a concentrated position as an investment strategy is that if the single asset increases substantially in value, the investor benefits. Conversely, it’s also considered a high risk strategy because if the single asset experiences volatility, the whole portfolio suffers. We will explore more pros and cons of taking a concentrated position in the next section. Pros and cons of holding a concentrated position Holding a concentrated position can be a double-edged sword, with both merits and downsides. Pro of holding a concentrated position There are cost savings associated with concentrated positions, as diversified portfolios tend to mean more regular trading. Furthermore, concentrated positions are often accumulated over the long term, and sales can be staggered to minimize capital gains taxes. Often, if an investor decides to have a concentrated position, it should be a result of intensive research on the market, the sector and the company, in addition to constant monitoring to check if the investment thesis still holds. In other words, if an investor is very familiar with a company and really “knows what he/she is doing”, this could be an opportunity to achieve greater growth. Cons of a concentrated position A concentrated position however can suffer from unexpected downturns and volatility much more so than a diversified portfolio. In a taxable brokerage account, selling concentrated positions built up over time can also trigger a large capital gains tax bill without expert advice and planning. What is portfolio diversification? Portfolio diversification is considered the opposite of holding concentrated positions. It means holding a range of small quantities of different types of assets, such as stocks from different industries and geographical areas, bonds, treasury bills, cash, sometimes real estate, and more. A diversified portfolio combines multiple asset classes and investment vehicles to reduce exposure to risk in any one area or sector. Studies and simulations have demonstrated that the highest cost-effective level of risk reduction is achieved by maintaining a well-diversified portfolio of 25 to 30 different stocks. Diversification reduces exposure to the ups and downs of companies, sectors, and markets by disseminating the risk in your portfolio. Holding assets that perform inversely to stocks also allows those assets to be sold, and stocks to be progressively purchased during market (or sector, or company) downturns. Because not all investments perform poorly at the same time, a broad portfolio is considered more stable than one that is concentrated. Diversification strategies Many of the strategies summarized below can be combined to increase the degree of diversification within a portfolio. Many different asset classes are available when investing, including equities, investments with a fixed income, cash and its substitutes, tangible assets, such as real estate, and commodities. You can build a diversified portfolio by including assets from various asset classes, because the risk and return characteristics of these asset classes normally vary. Typically, diversified investment portfolios include at least two asset groups. Another diversification strategy is bond maturity duration. In general, the risk of price swings brought on by alterations in market interest rates increases with bond maturities. Although short-term bonds often have lower interest rates, they are also less susceptible to the unpredictability of future yield curves. As a result, more risk-averse investors can think about acquiring longer-term bonds, which often pay higher interest rates. Purchasing a mix of both balances the benefits and downsides of each. Another strategy is to blend intangible assets like stocks and bonds with tangible assets such as real estate, farmland, hard assets like art or jewelry, and commodities. These capital investments have different characteristics compared with intangible or digital assets, since they can often be used, rented out, or developed, for example. Geographical diversification is another diversification strategy that many investors utilize. This strategy is particularly suited to expats, as they may find it easier to invest in both the US and in their country of residence. Or, you might invest in developed, developing and emerging regions. Always seek advice though to ensure you understand the risks involved. Wrapping up Investment decisions should always be underpinned by your risk tolerance and investment goals. While most investors look to diversify to reduce risk, there are circumstances where holding a concentrated position is a good strategy, and other times when it’s inevitable (such as when you’ve accumulated shares in a company you own or work for). If so, your expat financial advisor can let you know how best to move forward. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

“Time in the market beats timing the market.” - Ken Fisher Not even the most seasoned experts can predict stock movements. As a result, there is always a risk of buying too soon and seeing a stock price fall, or not buying soon enough and missing out on the best returns. Dollar-cost averaging is a strategy that lets you balance out potential volatility and which has been historically proven to be effective. In this article you’ll learn about the following topics: • What is dollar-cost averaging? • What are the advantages of dollar-cost averaging? • What are the disadvantages of dollar-cost averaging? • An example of dollar-cost averaging • Who should use dollar-cost averaging What is dollar-cost averaging? If we could all buy stocks or other investments when the market is down and sell them when it is strong, investing would be easy. Unfortunately, attempts to "time the market" are more often than not unsuccessful, as investors can often make erroneous purchases and sales in doing so. Dollar-cost averaging involves gradually purchasing stocks over time by investing the same amount at regular intervals, such as every month, regardless of market fluctuations. Individual investors often sell shares when equities fall due to fear of losses; conversely, they often jump back in when the stock market is booming, for fear of missing out. Over time, this erodes portfolio returns, as individual investors are often buying high and selling low driven by euphoria and panic, respectively. Dollar-cost averaging assists in freeing the investment process from subjective opinions and emotions and feeling the need to time the market. When investing using dollar-cost averaging, you purchase more security shares when the price is low and fewer shares when the price is high. Over time, this process results in you paying a lower average price per share overall. Dollar-cost averaging may be effective for Bitcoin investors, too. It was recently reported that two of the world's largest crypto investors are dollar-cost averaging into Bitcoin. President Nayib Bukele of El Salvador and renowned crypto tycoon Justin Sun purchase one Bitcoin every day, regardless of the state of the market. What are the advantages of dollar-cost averaging? As markets fall, by employing the dollar-cost averaging approach, you will buy assets at a lower cost ready for future gains, as markets rise that will raise your portfolio's worth over time. It's challenging to predict fluctuations, given the many factors that can affect a stock’s price, many of which can’t be predicted at all. The dollar-cost averaging method balances out the cost of purchases, irrespective of stock and market fluctuations, which is to the investor's advantage over the medium to long term. Dollar-cost averaging also encourages Investors to concentrate their efforts on the long term and ignore the noise and hype of daily reports about the stock market's short-term performance. What are the disadvantages of dollar-cost averaging? Dollar-cost averaging also has flaws, like any other investment technique. The market's propensity to rise over time is a drawback of dollar-cost averaging, as this suggests that investing a substantial sum upfront is likely to perform better than investing smaller sums gradually, depending on the timing of the upfront lump sum investment of course. Another disadvantage of dollar-cost averaging is that it can mean higher fees, as you’re buying smaller amounts of assets more often. Dollar-cost averaging also prevents you from realizing larger returns if you enter and leave markets with larger investments at favorable moments, whether by investment skill or by luck. However, few investors can point to a consistently good track record in this respect, so you also risk bigger losses. An example of dollar-cost averaging Jim has $600 to invest, and he decides to invest it as $100 a month for six months to purchase shares in a particular index-tracking mutual fund each month. The equities are traded for $10 per share throughout the first month, so Jim purchases a total of 10 shares in the first month. In the following 2 months, the share price falls to $5, and Jim can buy 20 shares each month, so he has 50 shares after 3 months. In the fourth month, the share price reverts to $10, and in the fifth and sixth month it rises to $20. At the end of six months therefore, Jim has 70 shares, and a total portfolio value of $1,400 on a $600 investment, despite the fluctuations in the fund price. This is thanks to the fact that he was able to buy more shares when the price dropped, making more profit when it rose again. On the other hand, If he had bought $600 of stocks at the start, he would have $1,200 total value. This demonstrates the advantage of dollar-cost averaging long term. If he had waited until the price dropped and spent the whole $600 the second month, he would have had a much higher return of $2,400, however that would have relied on timing the market, which it is very rare to get right. Who should use dollar-cost averaging? Expat investors can use dollar-cost averaging to buy stocks, or mutual or index funds, or other assets such as bonds. It is a strategy that allows you to avoid the stress and hassle of worrying about market timing and volatility,allowing an investor to accumulate wealth over different points in the economic cycle and build a robust portfolio over time. If your investment goals have a shorter time horizon however, it may not be the best strategy, and it’s also possible that you can miss out on significant gains compared to buying more when prices are temporarily depressed. If you are a risk-averse investor, or worry about market volatility, and you have a long-term approach to investing, using dollar-cost averaging as an investment strategy is definitely worth considering. Wrapping up #Don’t forget that expats investing abroad can incur additional US tax and reporting requirements, and particularly relating to non-US mutual funds. When considering dollar-cost averaging or other investment strategies, always discuss your ideas and plans with your expat financial advisor, who will be able to guide you through the risks, benefits and implications so that you can make a truly informed decision. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

“The individual investor should act consistently as an investor and not as a speculator” - Benjamin Graham As an expat investor, there are different strategic approaches to investing. Core and Satellite is an investment strategy that aims to strike a balance between reducing risk and maximising gains when building a portfolio. Specifically, in this article, you’ll learn about the following topics: • What is a Core and Satellite investment strategy? • What are the benefits of Core and Satellite? • Types of core investments • Balance of Core and Satellite • US tax matters What is a Core and Satellite investment strategy? The Core and Satellite investment approach involves splitting your investments in two portions: (i) a larger portion called Core, which is the foundation of your investments, typically being a safer portion of your portfolio whose performance will track markets in general. Usually the Core is made up of low-cost passive investments, such as index funds and ETFs. (ii) a smaller portion called Satellite, which are targeted investments to complement the Core, commonly being a riskier part of the portfolio with potential to achieve higher gains. Usually the Satellite is made up of thematic investments, individual stocks and actively managed funds. What are the benefits of Core and Satellite? Core and Satellite is a tried and tested investment approach, and it is always popular due to its several integral benefits: • Reduced costs and potential to achieve tax savings. There are two ways that savings are made with a Core and Satellite investment approach. The first is because the core part of the portfolio isn’t actively managed, thus reducing transaction and management fees. Secondly, because the core part doesn’t involve actively managed regular buying and selling, there’s potential to achieve savings on taxes relating to gains, which are taxed as income if bought and sold in the same year, or as a capital gain if the investment was held for over a year before being sold. • Potential to outperform benchmarks. The Satellite holdings, which are more focused and can be actively managed or targeted towards specific themes, have the potential to outperform the broader market. Investors can capitalize on investment opportunities they believe in or benefit from active management expertise in specific areas while still capturing the market's overall performance through the core portfolio. • Risk mitigation. Conversely, the core reduced the overall risk of the portfolio compared to a totally actively-managed investment approach. • Portfolio diversification. Core-and-satellite allows for natural diversification, as the core part of the portfolio typically covers a range of equities, rather than a small handful of individual stocks. Types of Core investments Core investments are meant to be defensive, so they are placed in a fund that contains a broad range of equities so that the performance tracks overall market performance. These are typically index funds. What is an index fund? Index funds track a particular index, such as the S&P 500. They normally contain a large number of the most important stocks in the index to ensure that the fund’s performance is closely correlated with that of the index. They have little turnover of stocks, so once set up they don’t need to be actively managed, keeping fees very low. There are two types of index funds: exchange-traded funds (ETFs) and mutual funds. Mutual funds pool the investors’ funds and an investor can usually trade in or out on a daily basis, while exchange traded funds (ETFs) can be bought and sold throughout the trading day, just like stocks. Expats should bear in mind however that investing in non-US (i.e. foreign) mutual funds is a considerable risk as a US taxpayer, and is normally inadvisable (see the note on PFICs below for more information about this). Expats can invest in US mutual funds without flirting with the same complex tax and reporting implications, though. Balance of Core and Satellite The satellite portion of a core-and-satellite portfolio constitutes the smaller part of the portfolio. Many investment managers work on an 80% core and 20% satellite basis, however the optimal mix ultimately depends on your goals, your time horizon, as well as your risk tolerance. So if you are looking to build rapid gains, and you are prepared to tolerate a higher risk, you could decide to have up to 40% of your portfolio in satellite investments, which carry a higher risk but also potentially higher rewards. Remember though that the point of the core is to provide stability and reduce costs and potential losses if the satellite investments perform poorly, so you shouldn’t reduce the size of the core proportion of your portfolio by too much. Within the satellite portion of your portfolio, you can also reduce risk by ensuring that you have several satellite investments rather than just one. US tax matters Don’t forget that investing abroad as a US expat can have US tax reporting implications. The three most common reporting forms to be aware of relating to investments are: • FBAR filing. As a US expat, if you have over $10,000 in total in any and all foreign financial accounts, including bank and investment accounts, at any time during a year, then you have to file Form 114 to FinCEN to report all of your foreign accounts. Your expat tax accountant can help you with this. • FATCA filing. Similarly, if the value of your financial assets (including cash and investments) in accounts registered abroad is over $200,000 at the end of the year, or over $300,000 at any time during a year, then you have to file Form 8398 to the IRS along with your federal tax return. • PFICs. The IRS deems non-US registered mutual funds to be a Passive Foreign Investment Company, or PFIC. Having investments in a PFIC means burdensome US reporting requirements, and there’s often a tax implication, too. Winding up Core and Satellite is a tried and tested strategy, however you should always consult with your expat financial advisor to ensure that your investments are set up in a way that will meet your needs and goals. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

Happy Fourth of July! A joyous occasion marked by vibrant fireworks and indulging in a staggering amount of hot dogs, 150 million of them being consumed in the US alone on this day. The Nathan's Hot Dog Eating Contest is one of the highlights since 1916 as the best eaters in the land compete for the mustard belt. Joey Chestnut is favored once again after eight victories in a row, but you might remember our stories of Takeru Kobayashi from our YouTube channel as he efficiently changed competitive eating for all time. Last weekend was far from mundane, as a mutiny in Russia approached eerily close to Moscow, which surprisingly had little impact on the markets, fixed income, equity or commodity. This demonstrates how the market have already factored in such pandemonium and turmoil. Fortunately, Josh kept me informed about the developments while attending the Cubs vs. Cardinals baseball game in London. It turned out to be the most attended MLB game of the season, as the former Olympic stadium was transformed into a lively baseball stadium. On a related note, Josh is actively involved in raising funds for the crisis in Ukraine, putting together and sending care packages of humanitarian aid to folks in critical need of humanitarian aid. I encourage you to support this cause by either donating to British-Ukrainian Aid if you’re in the UK or through your local charity wherever you are. In terms of the equity markets, we have witnessed a decent rebound lately. However, this recovery has been primarily driven by poor earnings growth rather than robust performance. Traditionally, good earnings growth entails companies selling more than in the past, leading to increased profitability. Unfortunately, the current uptick in stock prices is driven by cost reductions, particularly through employee layoffs. This pattern aligns with what we typically expect in this phase of the economic cycle, as central banks aim to curb inflation by raising interest rates. Inflation has been the main conversation in the markets over the last year, and is now fully mainstream as Taylor Swift and Beyoncé concerts have started to hit the news on shifting local inflation. All the while the United States seems to have successfully curbed inflation, Europe is making progress in the same direction. Conversely, the UK is grappling with rampant inflation, while China is focusing on stimulating its economy. As a result, the Federal Reserve has temporarily paused its rate hikes, China has decreased interest rates, and the Bank of England is increasing rates at a faster pace to catch up. These divergent actions underscore the fact that the global economy is now fragmented, with different regions moving in distinct directions. We anticipate developed markets aligning their interest rates with those in the US to combat inflation. Once the interest rates on bonds in these markets converge, rather than solely in the US, we can expect capital to flow out of the US, potentially weakening the dollar. In light of these developments, we are preparing to reallocate some of our fixed income investments to other currencies in the coming months and fine-tune our investment strategies accordingly. Turning our attention to the equities market, the majority of gains can be attributed to a rebound in the technology sector, particularly companies incorporating artificial intelligence (AI). This trend is reminiscent of previous years when buzzwords like the metaverse or cryptocurrency dominated the markets. As before, we anticipate a gradual deflation of this AI "balloon," leading to a differentiation between companies genuinely implementing AI strategies and those whose CEOs simply employ jargon. This was an ideal moment to meet Jonathan Krane, the founder of Kraneshares, for coffee to delve into the topic of China and their investments in the country. Krane exuded unwavering optimism regarding the eventual recovery, emphasizing that it might simply be delayed, and reassured that stimulus measures, such as lowering interest rates, would encourage consumer activity and spending. He highlighted the interference of geopolitics on consumer behavior, acknowledging that it had become a significant factor. Furthermore, he mentioned that Europe is urging China to play a mediating role in resolving the conflict between Ukraine and Russia. Upcoming Events: Dunhill Financial - 2nd Quarter Economic Update - July 5th 2023 at 1430 BST / 1530 CET You can view our full event calendar and country specific webinars here. The windfall elimination provision currently results in a reduction of American social security benefits for individuals who receive a foreign pension. Fortunately, the 118th Congress has taken steps to address this issue through the introduction of House bill H.R.82 - Social Security Fairness Act of 2023, as well as the Senate version, S.597. We are finally relaunching www.df-direct.com this month, our robo advisor for American expats overseas. This low cost solution will offer any client the opportunity to invest into our portfolios through a digitized solution. Please sign up here to get all announcements and promotions here. We will also publish our book on financial planning for American Expats, and you can sign up for the pre-launch of the book here. Please accept my apologies for not writing last month. Unfortunately, I faced a series of personal challenges, including a trip to the US for my Grandmother's funeral and other family issues, which made it difficult to gather my thoughts. However, I'm back with an update on the recent events and market trends that have been shaping our investment landscape. On a positive note, the ESG (Environmental, Social, and Governance) sector has recently achieved significant milestones. Investments in solar energy production facilities have surpassed those in oil exploration in 2023. This shift opens up new opportunities for investment and reinforces the importance of sustainable energy sources in shaping our future. I would like to extend an invitation to our upcoming quarterly economic update, scheduled for Wednesday July 5th at 2:30 BST. We will delve deeper into the topics discussed in this newsletter and provide you with valuable insights into the current economic landscape. We will also discuss our corporate periodic table of returns as can be seen below to reflect why a diversified portfolio outperforms over time. In my preparation for my bike ride from London to Paris, I got knocked off my bike from an opening door of an Uber. I would therefore like to remind everyone of the Dutch Reach! It involves using the arm furthest from the door so that your body must turn towards the window for a better view. I hope you find a way to keep cool in this hot summer (like Nala has) and that you have a wonderful Independence day filled with great hot dogs like the one Isa found at the Cubs game last weekend! Best regards, Brian If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

“Investing puts money to work. The only reason to save money is to invest it.” - Grant Cardone As an expat investor, there are different approaches you can take to investing. In this article, we'll look at three approaches - Active investing, Passive investing, and Thematic investing. Armed with this information, you’ll be able to make better decisions about your own investments, as well as have a more in-depth conversation with your expat financial advisor. In this article, you’ll learn about: • What is Active investing? • What is Passive investing? • What is Thematic investing? • What is the best investment strategy for expats? What is Active investing? A hands-on approach to investing is known as Active investing. It involves frequently buying and selling securities (stocks, bonds, etc.) with the aim of generating higher returns than average index returns by capitalizing on short-term asset price fluctuations. Successful Active investing generally requires you to have a high-level of skill, knowledge and experience to be able to successfully analyze companies and market trends to be able to accurately decide the right time to buy or sell a security, bond or other asset. As a result, an Active investor must have time to devote to research and analysis. For individual investors, most often this means paying a professional Active fund manager to research and pick investments on your behalf. Pros of Active investing: 1) Active investing gives investors more trading options, as they can pick individual assets as they aim to beat the overall market performance. 2) Active investing also provides more autonomy and flexibility, as you are in control of your investments and retain autonomy and freedom in your investment decisions. 3) When successful, Active investing aims to deliver a greater return. Cons of Active investing: 1) If you’re buying and selling regularly, you may not be able to optimize your trading activity from the point of view of taxes. In other words, you may have a higher capital gains tax bill each year (and more complex US tax reporting). 2) Active investing comes with an increased risk of losses, since it often means a greater exposure to unexpected short-term high volatility. 3) Active investing involves frequent trading, and that is associated with higher costs, such as brokerage fees, platform subscriptions etc. 4) Lastly, successful Active investing requires skill and time that most people don’t have, or otherwise higher cost implications due to paying an expert to stock pick for you. What is Passive investing? Passive investing is an approach that aims to match a specific market index (for example, indices such as S&P 500, Nasdaq 100 and FTSE 100). This is achieved by investing in index funds or ETFs (exchange-traded funds) that track the performance of the chosen index. Passive investors think long term, rather than seeking short-term gains from asset price or market fluctuations. Instead, they seek a steady average return over an extended period to build their wealth gradually over the course of time. Pros of Passive investing: 1) Lower fees - Unlike Active fund managers who Actively pick stocks, investments are made for the long term in Passive investing, hence avoiding recurring fees associated with regularly buying and selling. 2) Lower risk - Increased diversification and risk mitigation - Index funds and ETFs track indexes composed of hundreds of companies, sometimes even thousands of companies. If one company performs poorly, the negative impact on the overall portfolio can be mitigated by the positive performance of other investments: this is a powerful aspect from a risk management perspective. It is possible to obtain exposure to multiple sectors and geographies even with a small amount to be invested. 3) Ease of investment - You don’t require any specialized knowledge or need to perform deep research to choose the right asset to invest in, nor do you have to dedicate time to monitoring your investment regularly. 4) Delay capital gain tax - Passive investing is typically a “buy-and-hold strategy”, a long-term approach to hold investments for years or even decades. Hence, investors can delay capital gain tax charges until they sell the index fund or the ETF. Cons of Passive investing: 1) Limited investment options and lack of direct control - There’s less choice if you invest in index funds and ETFs. In other words, there is limited flexibility and the inability to respond to individual investment opportunities. 2) Less exciting - Less involvement in day-to-day market activity makes Passive investing more boring compared to Active investing. 3) Exposure to market downturns - During periods of significant market declines, passive strategies may experience losses that are proportionate to the overall market's decline. Passive investors who want to exit their investments at this point will likely crystallize losses. What is Thematic investing? Thematic investing is another dimension of investing: it is not the opposite of active or passive investing. Thematic investing is an investment strategy focusing on predicted long-term trends in the world rather than investing in a specific asset or indices. It allows the investor to capitalize or gain from the changes that happen across an entire industry. Thematic investing allows investors to grab the opportunity created by the market's macro-economic, geopolitical and technological trends. These may be caused by emerging or disruptive technologies, changing value systems, and new ideas, for example. Thematic investing example: BlackRock, the world's largest asset manager, has a Thematic investment philosophy focusing on several ‘megatrends’: 1) Rapid urbanization 2) Climate change and resource scarcity 3) Shifting economic power 4) Demographic and social change Thematic investing is gaining popularity because of the growing influence of technology in businesses and in our day-to-day lives. This innovative approach enables the investors to outperform the traditional way, as it allows an investor the following benefits: 1) Place a bet on the future - Thematic investing allows you to invest in the trends shaping the future global economy and society. 2) Access - This strategy efficiently and effectively includes exposure to megatrends in an investor's portfolio. 3) Engagement and alignment with personal interests - by choosing a particular investment theme, investors feel more engaged and connected with their beliefs. This makes investing more relatable and enjoyable from an emotional point of view. Successful Thematic investing is based on identifying potential structural changes and expected transformations early. Hence, a Thematic investment strategy favors long-term investors as it ensures that their portfolios are taken care of for future growth opportunities. The thematic offering has been expanding quickly, with investment managers making more funds and ETFs for individual investors in recent years. What is the best investment strategy for expats? Expat investors should discuss their goals, time horizon, risk tolerance, and personal investment preference with their expat financial advisor to create a plan that suits them. Everyone is different, and an investment strategy should be personalized to reflect your situation and preferences. Expat investors don’t have to pick and rely on one investment strategy such as Active, Passive, or Thematic investing, but can blend all three in varying degrees if they wish to. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

“The biggest risk is not knowing what you are doing,” Peter Bernstein, American financial historian and economist. All investments come with a level of risk. As an expat investor, it’s important to understand your portfolio’s inherent risk, as well as what level of risk you are willing - or what you may need - to take to achieve your goals. As well as general risk levels, expats also have other risks to consider, such as tax implications in multiple countries and cross -border investing currency risks, which we look at in another article. In this article, you'll learn about the following topics: • What is Investment Risk? • Risk-Reward • What is your Risk Tolerance? • What is your Risk Capacity? • What is your Required Risk? • Determining an investment’s risk What is Investment Risk? Investment risk is Investment risk is associated with the uncertainty and/or potential financial loss inherent in an investment decision. Some investment risks are avoidable by choosing safer investments, whereas other investment risks are considered unavoidable, such as: • Market risk - Loss in investment caused due to various macroeconomic and political events that affect the entire market. • Inflation risk - Loss of your money's purchasing power. Usually, safer investments like bonds yield low returns that may be lower than inflation. • Interest rate risk - Central bank interest rate changes can impact bond payments and also company liquidity and markets in general. • Currency risk - Currencies constantly fluctuate in value in relation to each other, so there’s a risk that your investments’ value decreases in relation to the currency you want to spend it in. • Socio-political risk - Political and social movements and changes in the country where you’re investing (or in other countries) can affect the value of your investments. Risk-Reward In theory, risk and reward are directly proportional to each other when investing. That is, the higher the risk, the more the reward, and conversely, the lower the risk, the less the reward. For example, bonds are traditionally considered a safer investment than stocks, as they provide steady interest payments and the return of the capital even if the company (or government) isn’t performing well. In contrast, stocks provide no such guarantee, but the additional risk is compensated in the form of greater expected returns. This view means that more risk-averse investors often hold a higher proportion of bonds compared to stocks in their portfolio, to maintain a lower overall investment risk. Typically investors start their journey by seeking investments associated with high expected returns - why bother with lower expected returns, right? Unfortunately, many investors are not aware that these investments are riskier, and as a result they end up incurring unexpected losses. This is why it is crucial to evaluate before investing what your risk tolerance is, what your risk capacity is, and what your required risk is. What is your Risk Tolerance? Risk tolerance is the level of risk that you’re willing to endure to achieve your investment goals. Your financial advisor will need to gain an understanding of your risk tolerance to be able to advise you in terms of what you invest in. To determine your risk tolerance, you’ll normally consider the following factors: • Your age - Generally speaking, younger people are often more comfortable taking risks in the pursuit of long-term gains, as they have more time to recoup possible losses compared to those closer to retirement. • Your personality - People with a more adventurous nature may have a more aggressive attitude towards their investment portfolio, and so may be comfortable with high volatility and risk levels. • Your investment goals - Your goals should ideally be the most important factor that determines your investment risk tolerance. Box - Risk Tolerance Illustration: Someone in their 30s planning for retirement has over three decades to save, so they have a good degree of freedom to take risks with their investments. Someone in their 40s planning to send their children to college in a few years on the other hand will need to ensure that they have funds available at the right time, as the payments will be required on a fixed date that can’t be deferred. Based on the above factors, risk tolerance is often classified into 3 levels. They go under different names by different firms and advisers, but they can be summarized as: • Aggressive Risk Tolerance- Investors willing to risk losing money to achieve higher gains. • Moderate Risk Tolerance- Balanced investors who want to focus on growing their money but without losing too much. • Conservative Risk Tolerance- Investors willing to take very little risk or accept very low volatility in order to preserve their capital. What is your Risk Capacity? Risk tolerance is how much risk you want to take, while risk capacity is how much risk you are able to take to achieve your goals. The following factors determine risk capacity: • The time horizon of investment - When you will want to start drawing down your investment • Investment size, additions and withdrawals - The size of your investment portfolio relative to future additions and withdrawals. • Investment income vs other sources of income - How much of your future income depends on your investments. An example to help you assess your risk capacity: If a couple have saved $40,000 as the down payment for a house they plan to buy in 2 months, their time horizon is short and the future withdrawal is large (100% of the investment), so they therefore have zero risk capacity. But if the same couple saved more, say $75,000, and they don’t plan to buy the house for another few years, then they have a higher risk capacity and so might decide to look for higher returns in the meantime. What is your Required Risk? Required risk is how much risk you will need to take in order to achieve your investment goals. The greater the return you need to achieve from your investment, the higher the risk you will have to take to achieve it. This means that sometimes there can be a disparity between your risk tolerance (how much risk you want to take) and the required risk (how much risk you need to take); if so, you will either have to reevaluate your goals, or accept a higher investment risk than you would normally feel comfortable with. Determining an investment’s risk All investments have a degree of risk, and it can be measured in different ways depending on the asset class involved. For example: when investing in stocks, a metric called "beta" is used to measure the volatility of a stock in relation to overall market movements. If a stock’s beta is greater than 1, then the stock is considered more volatile than the market in general, whereas if the beta is less than 1, the stock is less volatile, and so is a safer investment. Other factors that can help you evaluate an investment’s risk level are • Its historical profitability • Its historical growth rate • Its current value compared to its historic average value • Its dividend history • Probable sustainability Winding Up Every investor needs to assess their risk tolerance and capacity and seek professional advice before making investment decisions. Risk can be mitigated by strategies such as diversification and natural hedging to create a balanced portfolio with risk levels you’re comfortable with to achieve your goals. While it’s been said that if you subtract your age from 110, you can use the resulting figure to determine what proportion of your portfolio should be in riskier stocks, this doesn’t take into account your personal risk tolerance or goals. Your financial advisor will help you make a better balanced and more holistic assessment. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

“Sustainability is no longer about doing less harm. It’s about doing more good.” — Jochen Zeitz, President and CEO of Harley-Davidson. More and more, investors are looking to personalize their investment strategies, sometimes by investing in particular sectors or stocks, or with a focus on companies that maintain rigorous ethical or environmental standards. More investors focusing on these issues has in turn resulted in companies improving their standards in these areas, setting up ethical, social, environmental and governance policies to attract investors. It was also notable that during the Covid-19 pandemic, companies that set these standards experienced less volatility compared to the overall market. In this article, you'll learn about the following aspects: • What is ESG investing? • What are the benefits of ESG Investing? • Personalized and hyper-personalized investing • Considerations for expats What is ESG investing? ESG stands for environmental, social and governance. ESG companies set out policies and operate according to their own behavioral standards in these areas to become more sustainable and minimize their negative impact. Environmental standards can relate to reducing a company’s carbon footprint, reducing waste and pollution, renewable energy use, as well as utilizing green products, technologies and working practices. What that exactly means in practice depends on each company, of course; a mining or international transportation company or industrial manufacturer, for example, will have more to do in this area than an online services startup. Another example is agricultural producers using less chemicals or increasing animal welfare standards in farms. Social factors relate to how companies impact the communities in which they operate, as well as their internal employee welfare. This may mean improving factory conditions, donating to community improvement programs or infrastructure, establishing diversity and equality hiring procedures, or encouraging employees to spend time on charitable endeavors. Governance refers to corporate governance, the way a company is run, to ensure that the company adheres to high ethical management and accounting standards. This might include transparent shareholder reporting and accounting, ensuring good practice and the avoidance of conflicts of interest in the board, and the separation of management roles. What are the benefits of ESG Investing? There are two major benefits of ESG investing (and please note there are some ESG-related terms you may have heard about, such as impact investing, responsible investing, or socially responsible investing). The first is the knowledge for the investor that the companies you are investing in are actively working to minimize their negative impact on people or the natural world. Investing in companies aligned with your beliefs makes the whole process more relatable and enjoyable. The second benefit is often illustrated by the fact that companies that don’t focus on ESG have often blown up and lost money for investors over the last 20 years. There are numerous examples of this, including banks that have used unethical practices; e.g. Wells Fargo was discovered to have been running a fake account scheme in 2016, VW lying about emissions reducing filters in car exhausts, and Tyson Foods was sued in 2020 for wrongful death after employees with COVID-19 symptoms were allegedly told to to keep working. In all these examples, less than ethical behavior caused the share price to nosedive, losing investors money. As a result, ESG investing is believed to provide a measure of security against share prices sharply falling due to bad management, environmental bad practice, or unethical decision-making. Whether or not investors derive a genuine benefit from ESG investing often comes down to whether a company is sincere and effective in its ESG endeavors, or whether it is just creating policies and reports to entice investors without genuinely enacting them. Personalized and hyper-personalized investing Personalized investing is when rather than just investing in generic funds, you can tailor your portfolio to your individual tastes and preferences (often, but not necessarily, incorporating ESG preferences). Doing this while still achieving your investment goals can be challenging. This is where a good expat financial advisor comes into their own. Younger generations in particular expect a personalized experience in all aspects of their life more and more, thanks to having grown up with the sophisticated predictive algorithms that personalize our online experience based on our browsing habits and preferences, and they expect the same personalized experience when it comes to their investments. (Research by financial data company Refinitiv discovered that 64 percent of millennials and 51 percent of investors aged 35-54 are willing to pay more for personalized investing products and services.) In an age of robo-investment tools, It’s also true that if you’re paying for investment advice, you should expect a personalized experience and approach. You may for example have a particular interest in certain countries, companies, or investment sectors (or ESG preferences combined with particular countries, companies, or sectors). While AI holds the key to hyper-personalized investing at scale in the future, there are already great algorithms and platforms that let financial advisors take their clients’ preferences into account when building portfolios. The only limitation is the information that companies provide to allow algorithms to match them with specific investment preferences. For example, algorithms design investment strategies based on carbon emissions published by the companies, however in some cases the published data is not audited and may be inaccurate: so, the end result may be a portfolio not aligned with your beliefs. Another example of the growing trend of a personalized investment experience is how many investors like to be able to track their investments in real time. Such technology often enables this now, too, such as with an online dashboard that can be accessed by the client at any time. Wrapping Up With their international perspective and often cross-border lifestyles and future plans, expats often feel a greater need for personalized investing than the majority of Americans living in the States. Expats’ ESG preferences are also sophisticated, again perhaps thanks to their greater awareness of the wider world. Your expat financial advisor should be able to help you balance these preferences while also achieving your long-term goals. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.