Go global for slice of Apple pie
Expand your horizons and introduce some offshore stocks to your portfolio, writes Anthony Keane
GOING global with investments is the easiest and cheapest it’s been, just as the world’s best-known companies deliver record returns.
From individual stakes in Apple and Amazon to investment funds that spread your money across many companies and countries, new platforms are lining up to simplify the process.
A number of businesses offer direct overseas share trading, while some investors prefer diversified exchange traded funds or professionally managed listed investment companies and managed funds.
“Traditionally, accessing international markets was quite difficult,” said CMC Markets head of stockbroking Andy Rogers, whose firm has launched international share trading on its platform, with trades typically costing $19.99.
“Once you open an account it’s ready for international – you can trade in 11 different countries but 80 per cent of the volume we are seeing is to the US,” Mr Rogers said.
That’s because the big guns – including Netflix, Apple, Microsoft and Amazon – all call the US home, and many are brands that Australians use every day.
Fintech start-up Stake last month unveiled a new app to allow people to trade directly in US shares without having to deal with piles of forms or pay brokerage fees.
“It’s now simpler and cheaper than investing locally,” said Stake CEO Matt Leibowitz.
“There’s much more opportunity overseas – Australia is such a small percentage of the market. When we launched last year we were cautiously confident, but the user response has been incredible.”
Stake has more than 12,000 users and earns its income from foreign exchange transfers rather than every trade.
Setting up an account takes less than 10 minutes.
But while it’s easier to trade, investing internationally requires extra knowledge and skills. Diversification is vital, and seek advice if you are unsure about anything.
Global shares specialist PM Capital’s investment strategy has delivered returns averaging 19.8 per cent for the past five years, and CEO Paul Moore said investing internationally was “harder than people realise”.
“People think they know more than they do. A little bit of knowledge can be dangerous,” he said.
“We have 30 years of doing this. I have been global all my life. Even if you take us out of the equation, I would recommend retail investors need a credible manager.”
Super fund members usually have about one-third of their money in global shares, but for self-managed super funds, it’s only about 10 per cent.
However, the Commonwealth Bank’s head of SMSF customers, Marcus Evans, said there was surging interest in offshore stocks.
“Australians have historically ignored investing overseas because the local market always performed well – but that was before the boom by US giants such as Apple, which this month became the first $US1 trillion company,” he said.
“Alongside that has been the rise of the exchange traded fund market.”
These investments allow people to own an entire stock index – such as the US S & P 500 – in just one share.