Investing in other geographic markets has become a popular way to diversify a portfolio. The risks associated with being exposed to significant events in one location can be lessened by holding investments in countries outside our own.
The United States (US) offers some of the biggest companies in the world, with a strong technology presence. So you may be wondering, how do you buy US shares from Australia? We’ll cover some of the options available and some other important information.
How to buy US shares from Australia
Brokers with US shares available in Australia
The first thing you’ll need is a broker. Many of the big-name brokers in Australia offer international share trading.
In addition to these, there are brokers like Stake, which solely offer US equities. Although if you try to sign up to Stake at the moment, you may have run into a roadblock. According to The Australian Financial Review Stake has reported that it is still experiencing some functionality issues for a portion of its users.
Each broker is different and as such, you should take a little time to assess which works best for you. Evaluate what suits your needs including aspects like fee structure, which shares are available, and price data options.
US shares in a simple packaged form
Once you’re set up with a broker it’s a case of researching and picking which US shares you would like to buy. But if the recent volatility in individual US shares like GameStop Corp (NYSE: GME) has you looking for more diversified alternatives, exchange-traded funds (ETFs) are also available.
US-focused ETFs cast a wide net and package together a grouping of US shares into one tradable product. Examples of such ETFs available for trading on the ASX include BetaShares Nasdaq 100 ETF (ASX: NDQ), VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT), and iShares S&P 500 ETF (ASX: IVV).
What to watch out for
When buying US shares from Australia there are some things that are worth keeping an eye out for.
Firstly, hidden fees can add up, be sure to read all the product disclosures and individual costs when placing a trade. It is easy for a broker to market $0 brokerage fees these days, but there are other fees likely replacing that. Fees you may not notice include account funding fees, currency conversion fees, and membership fees for access to price data.
Some of these fees might be a couple of cents on the dollar, but this can quickly add up. For example, if you were to execute a trade to buy $5000 of a US share, paying 2 cents on the dollar in fees, that’s $100 in fees.