3. How to invest in international markets?

There are two ways to invest in international shares, either directly, or indirectly through an index fund like an ETF, or a managed fund.

 

In short

  • You can trade directly on the CommSec platform, buy an ETF, or invest in a mutual fund
  • Each channel offers different pros and cons which need to be carefully considered
  • Direct purchases give greater control and customisation, but require more work to research and monitor
  • ETFs are easy to access, are cost effective and highly diversified, but don’t offer you the ability to pick your own shares
  • Managed funds can be actively managed by professionals, but they can attract higher fees

Directly

 

Eligible customers can open a  CommSec International Trading Account and get access to 16 developed country markets, including the New York Stock Exchange, the London Stock Exchange, and the Tokyo Stock Exchange. For a refresh on conducting thorough research, visit this CommSec learn page. Simply log into your account, transfer funds into the relevant currency, launch the international Trading platform and start trading on US markets.

Before directly investing in any international security through a CommSec International Trading Account, applicants must have a CommSec Share Trading account and be able to provide an Australian residential and mailing address. You will also be required to complete a US tax form (W-8BEN).

Finally, prior to investing in international securities, we recommend you obtain professional advice to evaluate whether it’s appropriate to your particular financial circumstances. For further advice on US tax implications, please contact the IRS or your US tax adviser. You can read a short summary on US tax implications for Australian investors here.

Gain exposure to some of the world’s top developed economies: Through CommSec, you can gain access to major international stock exchanges, such as the New York Stock Exchange, NASDAQ, the London Stock Exchange and the Tokyo Stock Exchange. For a full list, visit the International Shares trading page here.

 

Indirectly

 

ETFs

A lower cost option is to invest in international shares through exchange-traded funds (ETF). There are a number of funds available that aim to replicate the performance of an index or group of assets in specific countries or regions around the world. While CommSec doesn’t offer direct access to any emerging market exchanges, you can gain exposure to these countries through thematic ETFs, which can also let you target more internationally-focused themes, such as mega cap US tech companies, for instance. You can buy and sell ETFs listed on the ASX, or exchanges that CommSec supports.

ETFs can be a simple, cost effective way to add international exposure to your portfolio. They’re easy to use and access, particularly if you trade via CommSec Pocket, but they won’t give you the ability to customise your portfolio the way buying single shares can and they come with a fee attached.

For more on ETFs, click here.

 

Managed funds

 

You can also invest in a managed fund, such as a listed investment company (LIC), which pools together the money of investors and uses it to buy and manage a portfolio of assets, such as international shares. These can either be actively managed, meaning someone selects which shares to buy and sell, or they can “passively” follow an index. For more on managed funds, click here.

 

The chart shows the relative performance of the ASX 200 Index (red) compared to the S&P 500 Index (green) since the beginning of 2017. In order to compare like for like, both indices have been rebased to a starting value of 1.

Disclaimer

CommSec Learn is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. Any securities or prices used in the examples given are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not indicative of future performance. Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945. CommSec is a Market Participant of ASX Limited and Cboe Australia Pty Limited (formerly CHI-X Australia Pty Limited), a Clearing Participant of ASX Clear Pty Limited and a Settlement Participant of ASX Settlement Pty Limited.

 

 

Disclaimer

This site is directed and available to and for the benefit of Australian residents only. © Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 ("CommSec") is a wholly owned, but non guaranteed, subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 and both entities are incorporated in Australia with limited liability.

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