Most investors in Australia are heavily weighted to Australian stocks. This is often due to the ease they are accessed, superior tax benefits and familiarity. However, the Australian sharemarket represents approximately 2% of the world’s sharemarket capitalisation. By limiting yourself to Australian stocks you may be missing out on many opportunities, especially in the healthcare, global brands and technology sectors.
So how can you invest overseas?
Exchange Traded Funds (ETFs)
The first way you can access overseas markets is through an exchange traded fund. This involves investing in an ETF listed on the ASX, that has an underlying investments in and exposure toa basket of overseas stocks. This may be buying an ETF with exposure to an index, such as the S&P 500 or a specific sector such as Cybersecurity.
TraCRs
A few years ago, Chi-X introduced TraCRs into Australia. TraCRs (Transferable Custody Receipts) allow you to purchase a beneficial interest in underlying ownership of a US listed share. Chi-X currently has 41 different TraCRs over US companies you can purchase, from some of the world’s largest brands. The benefit of this is it allows you to buy a beneficial interest in and right to convert into shares in these companies on an Australian exchange, in Australian market hours using Australian dollars.
Direct international shares
Finally, you can buy international shares directly through many brokers. This will allow you to buy almost any stock, however, may be more expensive and complicated than the first two options.
Things to consider
Whist there are many benefits to investing overseas, it is also important to consider the additional risks and disadvantages of investing overseas. Currency fluctuations will have an impact in your investment returns. There may be additional paperwork that is required to be completed and additional costs. There may be additional tax consequences of your investment. Different rules and reporting standards may be required for companies overseas.
Let Us Help
If you are interested in discussing retirement planning please contact Morgans Mackay today by calling (07) 4957 3033 or visiting the Morgans Mackay webpage.
Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited (Morgans) AFSL 235410 ABN 49 010 669 726 as general advice only and is made without consideration of an individual's relevant personal circumstances. Morgans, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.
.jpg)
