Hi all, there is a Doctor in the house! Dr. ETF is back again after my initial post.
The purpose of the Dr. ETF posts is to provide you with some examples of the strategies that can be accessed via exchange traded funds. Of course, we are not giving personal investment advice as we do not know your individual financial situation. Before investing, you should make sure you fully understand the products, their benefits and risks.
This time, I’ll be answering some questions from patients looking to go global…let’s get right into it.
“I need to get out more – with my investments that is. I’m particularly interested in getting exposure to US shares, and am looking for a long-term diversified investment that I can hold for some time…what’s your prescription?”
– Yankee Doodle Dandy
Dear Yankee, or is it Mr. Doodle Dandy?
You’re not alone. A lot of Australians need to get out more! Generally, allocations to international equities are very light for most investors, even though Australia represents less than 2% of global market cap. One way to get exposure beyond your backyard is to look at the US of A. With that in mind, you might want to look at the FTSE RAFI U.S. 1000 ETF (ASX Ticker: QUS).
This ETF can be used as a long term core U.S equity position. In the same way that the FTSE RAFI Australia 200 portfolio invests in Australian stocks weighted by fundamentals rather than market cap, the RAFI US 1000 portfolio invests in US companies according to economic fundamental measures (cash flow, dividends, sales, book value) rather than market capitalization (price x shares outstanding)
Like the Australian RAFI fund, it aims to produce superior long term performance compared to comparable indices weighted using market capitalisation.
“I am looking for stocks of the future. I want to invest in stocks that will shape the world we live in tomorrow, and I think that is largely technology based. Electric cars, iPads, Cloud computing…. That’s where I want to invest.
Dear Tech Geek,
The NASDAQ 100 ETF (ASX Ticker NDQ) may be the (electric!) vehicle for you.
The Nasdaq exchange is where most young, fast growing companies in the US trade, including many in the technology sector. The BetaShares Nasdaq 100 ETF provides exposure to the largest 100 stocks trading on the Nasdaq exchange. These are names like Apple, Google, Facebook, Tesla, TripAdvisor, Starbucks, PayPal, Netflix…
You can buy NDQ on the Australian stock exchange and let BetaShares do the leg work providing exposure to these US shares for you.