3. How to invest in international markets?
There are two ways to invest in international shares, either directly, or indirectly through another financial product like an Exchange Traded Fund (ETF).
In summary
- You can trade directly on the CommSec platform, buying shares you select yourself or buying active or passively managed financial products like ETFs. 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 typically highly diversified, but don’t offer you the ability to pick your own shares
- Actively managed financial products rely on investment decisions by professionals, but they can also attract higher fees
Investing directly
Eligible customers can open a CommSec International Shares Account and get online access to 13 markets, including the New York Stock Exchange, the London Stock Exchange, and the Tokyo Stock Exchange. Learn more about an International Shares Account here.
Before you invest directly in International Shares, you must complete a U.S. tax form as a part of the application process. It is also important to conduct thorough research prior to investing. For a refresher on conducting research, see How to Research. We also recommend you obtain professional advice to evaluate whether it’s appropriate in your individual financial circumstances. For further advice on U.S. tax implications, please contact your U.S. tax adviser.
Investing Indirectly
ETFs
A lower cost option is to invest in international shares through ETFs, which are themed investment options. 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 U.S. 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 International Shares, CommSec Pocket and CommBank app, 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. Find out more on how you can diversify your portfolio with ETFs.
Source: Reuters, CommSec
*10 year comparison based on monthly data ending 30 June 2023. The chart shows the relative performance of the ASX 200 Index (red) compared to the S&P 500 Index (green) In order to compare like for like, both indices have been rebased to a starting value of 1.
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Disclaimer
CommSec Learn is intended to provide general information of an educational nature only. Investing in overseas markets exposes you to risks including those related to movements in foreign currency exchange rates and market prices. The information has been prepared without taking into account your objectives, financial situation or needs. For this reason, any individual should, before acting on this information, consider the appropriateness of the information, having regards to their objectives, financial situation or needs, and, if necessary, seek appropriate professional advice. You can view the product Terms and Conditions, Product Disclosure Statement, Best Execution Statement, Financial Services Guide and should consider them before making any decision about these products and services. 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, a Clearing Participant of ASX Clear Pty Limited and a Settlement Participant of ASX Settlement Pty Limited.