Investing directly into international shares has never been easier
The slide in global sharemarkets is uncovering a once-in-a-decade opportunity to invest in some of the worldās best businesses, according to stockbroker Morgans.
Morgans suggests although Australian investors have typically favoured stocks listed on the local exchange, most of the worldās great brands are based overseas.
And some of those stocks are now trading at a discount of 15-25 per cent compared to their recent highs, offering long-term value.
MorgansĀ Equity StrategistĀ Tom Sartor says by looking offshore, investors can tap into consumer and technology leaders, like Amazon, Microsoft, and Visa.
Sartor also lists Apple, Google and Mastercard as dominant global brands.
āCOVID-19 will have an impact on these businesses, but it doesnāt alter their long-term appeal,ā Sartor says. āIn fact, the pandemic may actually accelerate the pace of technological change required for businesses to remain competitive, and these brands are already at the leading edge.ā
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Sartor says these global leaders typicallyĀ have no material net debt, andĀ someĀ are sitting on huge cash balances ($60 ā $100 billion for Google and Microsoft).
āCompanies like these will be impacted in any future economic downturn, but their financial strength puts them in a unique position,ā Sartor says. āIn tough economic times, smaller competitors often lack the capital to compete, whereas the leaders can use their surplus cash to become even stronger.ā
Sartor says other market-leading stocks include Warren Buffettās Berkshire Hathaway, Alibaba, Tencent and PayPal.
He suggests the global leaders offer exposure to business models not available from stocks listed on the Australian Securities Exchange, which is top-heavy with banks, mining stocks and bricks and mortar retailers.
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āMost Australians already have a significant exposure to Australian shares through their superannuation,ā he says.
āAnd while many investors would like to take advantage of opportunities overseas, buying shares listed on overseas exchanges can mean a lengthy process of establishing an account with an international broker, dealing with custodians and managing different currencies.ā
But he says the introduction of a new product ā TraCRs ā has made it easier to invest in international shares.
TraCRs (short for Chi-X Transferable Custody Receipts) provide the ability to invest in major companies listed on the NASDAQ and New York Stock Exchange.
āBy holding a TraCR, an investor gets the beneficial interest in a US share, which is ultimately held by a US custodian bank,ā Sartor says.
āThis gives investors exposure to the financial performance of that share, including the right to receive dividends in Australian dollars, and exercise voting rights.ā
He says TraCRs are likely to appeal to investors already familiar with transacting on the ASX.
āTraCRs are bought and sold through a broker in Australian dollars, during Australian trading hours, which can be more cost-effective than investing directly in shares in the US,ā Sartor says.
āClearing and settlement takes place in the Clearing House Electronic Subregister System (CHESS), and investors can see their holdings alongside their Australian-listed shares.ā
āOverall, itās never been easier to invest in international shares via the ASX.ā
For more information on investing into international shares contactĀ Morgans today.
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