IVV ETF has been a popular choice among investors seeking exposure to the roaring US stock market over the past three years.

IVV is now the third largest ASX ETF out of more than 400 on the market, with more than $11.67 billion invested in it.

However, last month, IVV ETF recorded the highest investment outflows, indicating an exodus amid the Iran war.

Aussie investors took $461 million out of the exchange-traded fund (ETF) in March, based on ASX data analysed by Betashares.

However, investors have not given up on US shares, with $232 million flowing into IVV ETF's currency-hedged counterpart in March.

That's the iShares S&P 500 AUD Hedged ETF (ASX: IHVV), which is up 1.62% to $62.68 per unit today.

This indicates investors still want US exposure but are mindful of the weaker USD against the stronger AUD today.

Stronger Aussie dollar weakens IVV ETF returns

The Australian dollar has risen almost 20% from just over 60 US cents 12 months ago to a three-year high of 70.8 US cents today.

As James Gruber, Equity Market Strategist at CommSec, explains:

When the Australian dollar strengthens, your international ETF returns shrink, and if the Australian dollar weakens, your returns improve.

To put that into perspective: last year, the S&P 500 delivered total returns of 17.88%, but IVV ETF investors received just 10.75%.

The US dollar has weakened due to expectations of interest rate cuts, concerns over the impact of tariffs, and geopolitical uncertainty.

Meanwhile, the AUD has strengthened given Australia has entered a tightening rate cycle, with two rate hikes so far in 2026.

There is also strong demand for our commodities, which foreign buyers purchase with Australian dollars, amid a new mining boom.

Investors prefer IHVV over IVV today because hedged ETFs reduce the impact of currency movements on investments. 

Gruber explained:

For example, you may invest in an ETF that tracks the S&P 500 index. If it is unhedged and if the Australian dollar strengthens after you buy it, your returns in AUD may drop, even if the underlying investments do well in their home currency. 

Conversely, if the Australian dollar declines, the value of an unhedged ETF may rise in AUD terms, assuming the underlying asset holds or increases in value.

Gruber points out that currency-hedged ETFs typically cost more than unhedged ETFs.

Case in point: IHVV has management fee of 0.1% while IVV has a fee of 0.03%.

US shares vs. ASX 200 in 2026

The S&P 500 has substantially outperformed the S&P/ASX 200 Index (ASX: XJO) over the past three years.

But change is afoot this year.

So far in 2026, the S&P 500 has lifted 0.6% while ASX 200 shares have increased 2.9%.

Gruber points out that a key difference between the two benchmark indices is their exposure to technology companies.

That's significant because a global tech wreck is underway, as investors fret over the impact of artificial intelligence (AI).

Illustrating the difference, the IVV ETF is 34% tech stocks, while the ASX 200 has just a 3% exposure to technology.

Gruber said:

… the S&P 500 leans heavily on technology stocks. 

If you add the likes of Amazon and Tesla – classified as consumer discretionary stocks in the S&P – and Meta and Alphabet – included in the communications sector – to the technology sector, then tech accounts for more than 40% of the S&P 500 index. 

The post Why ASX investors dumped IVV ETF last month appeared first on The Motley Fool Australia.

Rising oil and gas prices rattled investors, raising concerns about the impact on the businesses they were invested in.

We are starting to see that impact, with Qantas Airways Ltd (ASX: QAN) doubling its jet fuel cost estimates for 2H FY26 today.

Fortescue Ltd (ASX: FMG) chair Dr Andrew Forrest has also revealed they paid up to double for emergency fuel supplies last month.

With all this in mind, it's interesting to look at how Aussie investors repositioned their ASX ETF portfolios as the conflict unfolded.

Aussies have $329 billion invested in ASX ETFs, and last month they ploughed an additional $5.6 billion into their favoured funds.

That makes March the third-highest month for net inflows ever. It seems the volatility caused by the war did not dampen their interest.

A new report from Betashares, which shows the top 10 ASX ETFs for inflows and outflows last month, reveals some interesting trends.

Let's take a look.

Top 10 ASX ETFs for inflows last month

Top 10 ETFs for outflows

How ASX ETFs investors repositioned last month

The VAS ETF is the most popular Australian shares ETF on the market, so it's no surprise to see it take out the top spot.

VGS is the most popular international shares ETF, so it's routine to see it close to the top as well.

The presence of IHVV in the top inflows list, and its unhedged counterpart IVV ETF in the top outflows, shows investors are mindful of currency changes over the past 12 months.

The Australian dollar has risen from just over 60 US cents 12 months ago to a three-year high of 70.8 US cents today.

As James Gruber, Equity Market Strategist at CommSec, points out:

When the Australian dollar strengthens, your international ETF returns shrink, and if the Australian dollar weakens, your returns improve.

Outflows from QAU ETF reflect profit-taking amid a 21% decline in the gold price over the first three weeks of March.

Sprott Managing Partner, Paul Wong, said investors need not be worried though.

Wong added:

Gold's March drop reflects a liquidity crunch, not a breakdown in its long-term role. 

As financial stress builds, gold is likely to reassert itself as a key monetary anchor.

Another interesting trend is the inflows into non-US international ETFs, reflecting the poorer performance of US markets this year.

In the year to date, the S&P 500 Index (SP: .INX) has lifted just 0.6% compared to a 3% bump for the ASX 200.

The post How ASX ETF investors repositioned as the Iran war shook markets appeared first on The Motley Fool Australia.

US stocks are particularly popular given the S&P 500 Index (SP: INX) has outperformed the S&P/ASX 200 Index (ASX: XJO) for three years.

The two biggest ETFs by market capitalisation that provide exposure to the US market are iShares Core S&P 500 AUD ETF (ASX: IVV) and Vanguard MSCI Index International Shares ETF (ASX: VGS).

IVV ETF tracks the S&P 500, while VGS tracks the MSCI World ex-Australia (with net dividends reinvested) AUD Index.

About 70% of the VGS portfolio is US stocks.

Neither ETF has currency hedging, and this eroded returns for Aussie investors last year given the weaker USD against the AUD.

The Aussie dollar rose from about 62 US cents in January 2025 to about 67 US cents by December.

Our currency reached a three-year high of 71 US cents last month. It is 69.65 US cents at the time of writing.

The US dollar has been weakening due to expectations of US interest rate cuts, concern over the economic impact of new tariffs, and broader geopolitical and trade uncertainties.

Meanwhile, the AUD is stronger amid expectations of rate hikes in 2026 and strong demand for Australia's commodities, particularly gold.

This extra demand supports our currency because foreign buyers must pay for our exports in Australian dollars.

Rising commodity prices amplify the total demand for the AUD even further.

With all this at play, should ASX ETF investors consider switching into, or buying, products with currency hedging to insulate their returns?

Vanguard's take on currency hedging

Major ASX ETF provider Vanguard describes the pros and cons of hedging as follows:

For investors, a strengthening AUD would be a headwind for unhedged portfolios, reducing returns on international assets. 

Conversely, a weaker AUD boosts unhedged returns and benefits Australian companies earning profits overseas.

Vanguard says short-term volatility in currencies is inevitable, and hedging is more about managing long-term risk rather than chasing returns. 

Hedging is not a one-size-fits-all decision.

The choice should come after building a plan, setting an asset allocation and considering costs. 

The decision doesn't have to be all-or-nothing either.

Many investors and their advisers aim for a "least regret" approach by hedging around 50% of the portfolio.

A word from Global X

Justin Lin, from ETF provider Global X, said foreign exchange and currency exposure has been front of mind for investors in recent times.

Lin says AUD currency-hedged ETFs are best viewed as "tools for short-term, tactical asset allocation rather than long-term buy and hold".

Investors may want to consider tactical currency hedging when they expect significant fluctuations in exchange rates that could impact their returns.

For example, if interest rates are rising in their home country but decreasing or unchanged in the country where they hold investments.

In this scenario, the home currency may appreciate, reducing the value of their foreign investments.

Hedging options with ASX ETFs

Vanguard and other ETF providers offer currency-hedged versions of some of their most popular ASX exchange-traded funds.

For example, VGS is unhedged, while Vanguard MSCI Index International Shares (Hedged) ETF (ASX: VGAD) is its hedged counterpart.

Take a look at their performance in 2025.

As you can see, the percentage of price growth between VGS and VGAD widened over the year as the AUD strengthened against the USD.

So, VGAD did better.

Here's another example.

Last year, the S&P 500 delivered total returns, including dividends, of 17.88%. However, IVV ETF investors received a total return of 10.75% due to the impact of the currency exchange.

The hedged version of IVV ETF is iShares S&P 500 (AUD Hedged) ETF (ASX: IHVV), which returned 16.88% (after fees).

As you can see below, IHVV began outperforming IVV in terms of the percentage of capital growth in April last year.

In the end, IHVV did best.

The post Should you consider currency-hedged ASX ETFs? appeared first on The Motley Fool Australia.

Ongoing strength in the US market is lifting not just ASX ETFs holding US stocks but also those holding diversified international shares.

This is because US shares dominate diversified global ETFs as America is home to so many of the world's largest and most profitable businesses.

For example, the VGS ETF is invested in about 1,300 of the world's largest companies listed in major developed countries.

About 76% of those companies are in the US.

Another example is the iShares Global 100 AUD ETF (ASX: IOO), which seeks to track the performance of the 100 biggest global equities.

Just under 81% of IOO ETF holdings are US shares.

Last night, the benchmark index for the US market, the S&P 500 Index (SP: .INX), smashed another record high at 6,698.88 points.

The S&P 500 is up 13.8% in the year to date compared to an 8.2% bump for the S&P/ASX 200 Index (ASX: XJO).

Last night, the Dow Jones Industrial Average Index (DJX: .DJI) also hit a record 46,447.13 points, up 9% this year.

The tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) followed suit with its own record of 22,801.90 points, up 26.8% in 2025.

On the ASX today, the ASX 200 is up 0.74% and the S&P/ASX All Ordinaries Index (ASX: XAO) is up 0.69%.

Let's look at some of the ASX ETFs holding international shares that are setting new 52-week highs, if not all-time records, today.

International ASX ETFs smash records on Tuesday

The post Own IOO, IVV, or VGS ETFs? They're smashing records today! appeared first on The Motley Fool Australia.

The S&P 500 Index has rallied strongly since April's dramatic 'Liberation Day' sell-off. 

After reaching a 52-week low of 4,835 points, the index has rallied nearly 35%.

Of course, the S&P 500's impressive run has strongly benefited ASX investors holding US-focused exchange-traded funds (ETFs). 

Popular ASX ETF iShares S&P 500 AUD ETF (ASX: IVV), which tracks the S&P 500 Index, has rallied more than 25% since April. Since this is an unhedged ETF, currency movements are responsible for the ETF underperforming the index. The hedged version, iShares S&P 500 (AUD Hedged) ETF (ASX: IHVV), almost exactly matches the performance of the S&P 500 Index.

Another popular ASX ETF, the Vanguard US Total Market Shares Index AUD ETF (ASX: VAS), has also climbed more than 25% since its April low.

What has driven this surge?

A series of positive news developments has contributed to this surge. 

This included tariff negotiations and deals, as well as strong share price action from the 'Magnificent Seven' companies, which currently make up around 40% of the index. 

In particular, Nvidia Corp (NASDAQ: NVDA), which represents around 8% of the S&P 500, has more than doubled since April. After hitting a 52-week low of $86.63 in April, it has rebounded strongly, closing at $176.60 on Friday. Last week, Nvidia announced it was investing $5 billion in Intel Corp (NASDAQ: INTC), sending Nvidia shares higher. 

However, the major contributor over the past few weeks has been the US Federal Reserve signalling and then following through with lowering interest rates. 

The Federal Funds Rate (FFR) currently stands at between 4% and 4.25%, with the Fed signalling that more cuts are on the horizon. This is important, given that equity markets are forward looking.

Goldman Sachs predicts the rally to continue

The good news for those invested in the US, either directly through the ownership of US shares or indirectly through ASX ETFs, is that investment bank Goldman Sachs is predicting further upside. 

As reported by The Australian Financial Review, Goldman Sachs Strategist David Kostin has lifted his three, six, and twelve-month targets for the S&P 500.

Kostin rolled forward three, six, and twelve-month S&P 500 return forecasts to 2%, 5%, and 8%, respectively.

In his note, Kostin cited the market's historical response to rate cuts, writing:

From current levels, these returns imply index levels of 6800, 7000, and 7200. Our forecast for further equity market upside would be consistent with the historical pattern during rate cut cycles. During the past 40 years, the S&P 500 has generated a 15 per cent median 12-month return when the Fed resumed cutting rates against a backdrop of continued economic growth.

Economists currently expect at least two more 25 basis point cuts to be delivered before the end of 2025. 

Kostin also believes that Corporate America will continue to report higher profits, contributing to further share price rises. 

He wrote:

With long-term interest rates relatively stable, earnings should remain the primary driver of equity upside going forward. Equity valuations are elevated relative to history but appear close to fair value based on the underlying macroeconomic and corporate fundamental backdrop.

Foolish Takeaway

It's been a rollercoaster year for the S&P 500. Just a few short months ago, US equity markets fell sharply as US President Trump unveiled his 'Liberation Day' tariffs. Evidently, the 'sell America' trade has reversed, with the S&P 500 rallying more than 35% since then. Interest rate cuts have given investors a fresh wave of optimism, with the index hitting a fresh record last Friday. The better news for US-focused investors is that the rally may continue, with Goldman Sachs lifting its S&P 500 price targets.

The post S&P 500 hits another all-time high! Goldman Sachs lifts forecast appeared first on The Motley Fool Australia.

This follows a big session on Wall Street, with the benchmark S&P 500 Index (SP: .INX) reaching another record close of 6,656.8 points.

Today's strong market appears to be having an outsized impact on ASX exchange-traded funds (ETFs).

At the time of writing, an extraordinary number of ETFs have hit new 52-week highs, or multi-year highs, on the back of today's exuberance.

In fact, at the time of writing, 68 ASX exchange-traded funds have hit new high prices.

Macroeconomic elements may be playing a role in the market surge.

Yesterday, we had the news that the US Fed Reserve has cut interest rates and Australia's jobless rate held steady last month.

ETFs are a favoured way for Aussie investors to access international markets without the hassle of trading on an overseas exchange.

The amazing three-year run for US equities has inspired Aussie investors to think beyond the ASX 200 and the local banks and miners.

The popularity of ETFs is a global trend playing out strongly in Australia.

Betashares data shows Australian investors ploughed a record $5.28 billion into ASX ETFs in July alone.

68 ASX shares setting new records today

Here is a sample of the 68 ASX exchange-traded funds smashing new highs today.

The post 68 ASX ETFs smash multi-year highs amid strong trading on Friday appeared first on The Motley Fool Australia.

This week, the Australian dollar has gained ground against many major currencies. This comes after being historically weak for much of the year. 

Most notably, AUD/USD has surged to its strongest level in six weeks.

According to analysis from The Bull, this is largely attributed to the market's interpretation that the US labor market is cooling, reinforcing expectations of imminent monetary policy easing by the Fed.

Why does it impact ASX ETFs?

ASX ETFs that track global markets are either hedged or unhedged. 

Currency-hedged means the fund is designed to reduce (or eliminate) the impact of exchange rate fluctuations.

Therefore the recent rise of the AUD won't impact these funds. For example, if you own the iShares S&P 500 AUD Hedged ETF (ASX: IHVV), you're only exposed to the S&P 500's actual performance, regardless of currency fluctuations.

However if a fund is not hedged, when the AUD strengthens, each USD is worth fewer AUD. This means returns fall, even if the indexes like the S&P 500 Index (SP: .INX) rises.

What does it mean if you're holding non-hedged ASX ETFs?

If you already own a non-hedged ETF that's invested in US stocks, a strengthening Australian dollar can negatively impact your investment returns. 

That's because your ETF holds assets denominated in U.S. dollars. When those are converted back into AUD, a stronger local currency reduces the value of those USD-denominated gains. 

So even if the US market performs well, part of that growth can be offset by currency movements. 

In contrast, if you own a non-hedged ETF, your returns are directly influenced by both the performance of the underlying U.S. stocks and the AUD/USD exchange rate.

What does it mean if you're looking to buy?

If you think AUD will strengthen, hedged funds can protect your returns.

If you think AUD will weaken, a non-hedged fund can potentially boost your AUD returns.

In the long-term, these fluctuations will mostly balance out. Currency-hedged funds may seem like a simpler choice. However they often come with higher fees due to the increased management required. But for some investors, this is worth the peace of mind.

If you are considering buying a US focussed ASX ETF, some common non-hedged options may include: 

• BetaShares NASDAQ 100 ETF (ASX: NDQ)
• iShares S&P 500 ETF (ASX: IVV)

On the flip side, hedged ASX ETFs tracking the US market include: 

• iShares S&P 500 AUD Hedged ETF (ASX: IHVV)
• Betashares Nasdaq 100 ETF – Currency Hedged (ASX: HNDQ)

The post What does the surging Aussie dollar mean for non-hedged ASX ETFs? appeared first on The Motley Fool Australia.

Many investors use these funds to gain exposure to international markets like the S&P 500 Index (SP: .INX) or NASDAQ-100 Index (NASDAQ: NDX).

However when you choose funds that track these markets, you might be faced with the decision of hedged or unhedged funds. 

That's because these funds are tracking companies based in other countries. 

What is currency hedging?

Currency-hedged ETFs are exchange-traded funds that are designed to reduce (or eliminate) the impact of exchange rate fluctuations on investment returns when investing in foreign assets.

When you invest in international stocks or bonds, you're exposed not just to the performance of those assets, but also to changes in the foreign currency against your home currency.

This year, the Australian dollar has been volatile compared to the USD. The value of $1 AUD fell as low as 60 US cents in April, and has slowly climbed back to around 65 US cents at the time of writing. 

Let's look at how this has impacted ETFs that track the S&P 500 Index (SP: .INX). 

Impact on non-hedged ASX ETFs 

If you own a non-hedged ASX ETF that tracks a US index like iShares S&P 500 ETF (ASX: IVV), your returns are affected by:

• The performance of the S&P 500 (in USD)
• The AUD/USD exchange rate

When AUD is weak like it was in April (around 60¢), each USD of S&P 500 return converts into more AUD. This means your returns in AUD increase and you benefit from currency depreciation. 

However, when the AUD strengthens, each USD is worth fewer AUD. This means your AUD returns fall, even if the S&P 500 rises in USD. 

Hedged ETFs 

Now lets look at a hedged fund, like iShares S&P 500 AUD Hedged ETF (ASX: IHVV).

This ETF hedges currency exposure using derivatives, aiming to keep returns in AUD terms only reflecting the S&P 500.

Whether the AUD goes up or down doesn't materially affect returns.

You're only exposed to the S&P 500's actual performance, not currency fluctuations.

Are hedged ASX ETFs better?

Unfortunately, it's not as simple as which option is better or worse. It largely depends on your risk appetite and personal preference. 

Over the long term, currency fluctuations will likely balance out. 

However, some investors may prefer to avoid these rises and falls, particularly if you invest in funds that are exposed to more volatile economies. 

What are some common hedged funds?

If you are looking to invest in currency hedged ETFs, here are some to consider: 

• Betashares Nasdaq 100 ETF – Currency Hedged (ASX: HNDQ)
• Vanguard MSCI Index International Shares (Hedged) ETF (ASX: VGAD)
• Betashares Global Quality Leaders ETF – Currency Hedged (ASX: HQLT)
  

Some more thematic options include: 

• BetaShares Global Healthcare ETF – Currency Hedged (ASX: DRUG)
• Vaneck Msci International Small Companies Quality (Aud Hedged) Etf (ASX: QHSM)

The post Is it a good time to focus on currency hedged ASX ETFs? appeared first on The Motley Fool Australia.

Back in mid-March, the Australian dollar was buying around 64 US cents. But by 8 April, a few days after Trump's 'Liberation Day' tariff announcements, one Aussie dollar was buying just 59.14 US cents.

The dollar has since bounced back against the Greenback, presently buying roughly 63.7 US cents.

Given the magnitude of these swings and the ongoing uncertainty regarding the stability of US trade policy, it's probably fair to say that we could continue to see big swings in this exchange rate.

This, of course, has some profound implications for ASX investors. If you own any US stocks or even ASX-listed exchange-traded funds (ETFs) that hold US stocks, the US-Australian dollar exchange rate can have a big impact on the value of your portfolio.

Does a lower dollar benefit ASX investors?

In general, a lower Australian dollar (or higher US dollar) is good news for Australian investors holding US-denominated investments. A lower Aussie dollar means that American investments can be sold for comparatively more Australian dollars. Further, any dividends that these investments pay out in US dollars are also inherently more valuable to ASX investors.

However, as with most things in investing, it is also a double-edged sword. For example, a lower Aussie dollar means that it is more expensive to purchase additional Benjamins if an investor wishes to double down on their American investments.

This dynamic, together with the enhanced volatility that both the US and Australian dollars are currently experiencing, might help explain why demand for dollar hedging is reportedly at a five-year high.

Yep, according to Bloomberg, demand for hedging against currency movements has "jumped to a five-year high" amid Trump's tariff policies. This, according to the report, "threatens to sap US economic exceptionalism and undermine the greenback" in many investors' minds.

Here's how Bloomberg explained this trend:

An index measuring three-month risk reversals — or the spread between call and put options — on the dollar against 12 of its major peers has dropped to the lowest level since the depth of the global pandemic in March 2020.

So, should ASX investors follow suit and opt for 'hedged' ETFs rather than unhedged ones? ETFs that are hedged use financial instruments to nullify any impacts on the value of these funds from currency movements. Unhedged funds offer no such protections, of course.

Hedged or unhedged: Which ASX ETFs to buy?

Many of the ASX's most popular international-based ETFs and index funds offer currency-hedged versions. These include the iShares S&P 500 (AUD Hedged) ETF (ASX: IHVV), the BetaShares Nasdaq 100 Currency Hedged ETF (ASX: HNDQ), and the VanEck Morningstar Wide Moat (AUD Hedged) ETF (ASX: MHOT).

So, are these funds a better bet than their unhedged counterparts?

Well, I tend not to think so. The Australian dollar and the US dollar have long had a volatile relationship. Some of us might remember the days of parity back in the early 2010s when the Aussie would buy more than one US dollar. Fewer of us might also remember the dark days of the turn of the millennium when the Aussie slid as low as 50 US cents.

Predicting what might happen in the foreign exchange markets is almost as difficult as predicting what the share market will do tomorrow.

Personally, I don't bother to. What is more important, in my view at least, is investing in assets that offer compounding growth for years into the future.

Most hedged ASX ETFs will charge you for the service, too. For example, the management fee for the iShares S&P 500 ETF (ASX: IVV) is currently 0.04% per annum. But its hedged IHVV sibling will cost an investor 0.1% per annum.

I would rather take the cheaper fund and deal with the currency fluctuations as they happen. Over the long run, I think a lower fee beats the chance of saving you a few dollars from a fluctuating currency.

The post US dollar hedging demand hits five year high. Should ASX ETF investors consider hedged ETFs? appeared first on The Motley Fool Australia.

The S&P 500, which represents America's 500 largest companies, fell another 1.7% last night to close at 4,982.77. The index is now down 18.9% from its all-time high of 6,144.15, reached in mid-February. It is also on the cusp of entering a bear market, defined as a decline of more than 20% from its recent peak. 

Several ASX exchange-traded funds (ETFs) provide ASX investors with exposure to America's 500 largest companies. Those wanting to increase their exposure to these companies should familiarise themselves with the differences between the ETFs, which could materially impact forward returns. 

Capitalisation-weighted vs equal-weighted

The first distinction concerns how the weights are chosen for each of the 500 companies. 

Like most ASX index ETFs, the iShares S&P 500 AUD ETF (ASX: IVV) is market capitalisation weighted. This means every holding is exactly proportional to its weighting in the S&P 500 Index. As of March 2025, its top five holdings are Apple Inc (7.00%), Microsoft Corp (5.85%), Nvidia Corp (5.57%), Amazon.com Inc (3.76%), and Meta Platforms Inc (2.65%). 

An alternative option is the equal-weighted version. The BetaShares S&P 500 Equal Weight ETF (ASX: QUS) holds the same 500 companies, except each holding carries an equal weighting. This means that the index's five largest companies each represent less than 0.3% of the ETF. The portfolio is rebalanced quarterly to maintain these weights. 

Over the past two years, the largest technology companies have outperformed the index. However, this year, those same companies have been among the biggest detractors. For example, Apple is down nearly 30%, while Tesla has fallen 42%.

Therefore, it's no surprise that the equally weighted QUS ETF has outperformed the market capitalization-based IVV ETF for the year to date. QUS has fallen 7.4%, compared to 11% for IVV.

Investors who believe the largest US companies are now undervalued relative to the market should buy the IVV ETF. However, those who believe they will continue to underperform the market should go with the QUS ETF.

Hedged vs unhedged

Another consideration is currency. With the Australian dollar relative to the US dollar trading at below 60 cents for the first time since COVID, investors may be reluctant to invest in the US. The iShares S&P 500 (AUD Hedged) ETF (ASX: IHVV) provides exposure to the S&P 500 Index while mitigating currency risk for Australian investors. It is also market capitalisation weighted. 

For the year to date, the IHVV ETF is down 13.28%, underperforming the IVV ETF. However, if the Australian dollar were to strengthen, investors could benefit from buying IHVV units at today's price.

Foolish Takeaway

The S&P 500 Index hasn't traded this low in a year. Investors looking to invest in America's 500 largest companies may be looking at ASX ETFs. Those with a view on how the largest companies might perform from here, or on currency, should select their ASX ETFs accordingly.

The post S&P 500 Index reaches 1 year low: Are you looking to buy US focused ASX ETFs? appeared first on The Motley Fool Australia.

Diversification can involve spreading your money across different asset types, companies, sectors, or markets. The aim is not to have all your investments eggs in one basket and help protect your wealth during periods of volatility.

But achieving a diversified investment portfolio doesn't mean you need to immediately go on the hunt for a bunch of individual stocks to buy.

One way to add instant diversification to your nest egg is by buying an ASX exchange-traded fund (ETF) or two.

So, if you plan to run the ruler over your portfolio this Easter, and suspect it could use a shake-up, read on!

Because our Foolish writers jumped at the chance to tell us which ASX ETFs they reckon are worth hopping on in April.

7 best ASX ETFs for April 2023 (smallest to largest)

VanEck Video Gaming and Esports ETF (ASX: ESPO), $79.08 million

BetaShares Gold Bullion ETF-Currency Hedged (ASX: QAU), $470.98 million

Betashares Global Cybersecurity ETF (ASX: HACK), $669.96 million

iShares S&P 500 (AUD Hedged) ETF (ASX: IHVV), $1.07 billion

Betashares Nasdaq 100 ETF (ASX: NDQ), $2.85 billion

VanEck MSCI International Quality ETF (ASX: QUAL), $3.36 billion

Vanguard MSCI Index International Shares ETF (ASX: VGS), $5.55 billion

(Market capitalisations as at market close on 5 April 2023)

Why our Foolish writers love these ASX exchange-traded funds

VanEck Video Gaming and Esports ETF

What it does: The VanEck Video Gaming and Esports ETF is a fund that holds a basket of companies all involved in the production and distribution of video games, consoles, and gaming and esports services.

By Sebastian Bowen: Gaming and esports are industries that continue to see massive growth worldwide. And this ETF offers an effective investment for exposure to this trend.

Here in Australia, we don't have too many gaming shares on the ASX. Gaming and esports don't have too much representation in most popular international index funds either. This ETF fills the niche nicely, though.

It exposes investors to well-known gaming names like Nintendo, Activision Blizzard, and NVIDIA, all under one roof.

The VanEck Video Gaming ETF has had a rough year, and remains down by more than 22% from its 2021 highs. But I don't see gaming, esports, and the companies facilitating them going away anytime soon. So it might be a good chance this April to take a second look at this ETF for both its growth potential and diversification qualities.  

Motley Fool contributor Sebastian Bowen does not own units of the VanEck Video Gaming and Esports ETF or have positions in any of the stocks mentioned.

BetaShares Gold Bullion ETF-Currency Hedged

What it does: The Betashares Gold Bullion ETF is intended to track the performance of the gold price. This ETF is hedged for currency movements in the exchange rate between the greenback and Aussie dollar.

By Bernd Struben: Economic uncertainty and geopolitical unrest look set to remain over the coming months. These factors have already helped drive gold up 24% from the recent 3 November lows as investors seek haven assets. The BetaShares Gold Bullion ETF is up 19% over that same time.

At US$2,022 per ounce, gold is fast approaching new record highs. I believe that record may be broken in April. Global inflation remains high amid signs central banks are ready to pause their tightening cycles, a good mix for the yellow metal.

This ETF is backed by physical bullion, held in a vault of JP Morgan Chase in London. That means investors can gain exposure to gold price moves without having to buy and safeguard their own bullion. The BetaShares Gold Bullion ETF charges an annual management fee of 0.59%.

Motley Fool contributor Bernd Struben does not own units of the BetaShares Gold Bullion ETF.

Betashares Global Cybersecurity ETF

What it does: This ASX ETF invests in a portfolio of internationally-listed companies that are involved in cybersecurity. There are currently 35 companies in the portfolio, 83% of which are US-listed, though they generate earnings from around the world.

By Tristan Harrison: This ASX ETF has fallen by more than 20% since November 2022, making it great value buying right now.

I believe businesses and governments will continue to pay for cybersecurity services, even during economic downturns, so I think the underlying businesses held by this ETF are quite defensive.

And, sadly, I think demand for cybersecurity is likely to increase over the long term as more services are carried out online and the instance of cybercrime continues growing.

The Australian Cyber Security Centre (ACSC) 2022 report said that the number of cybercrime reports had increased 13% year over year, while the average cost per cybercrime incident increased by 14%. If this trend continues, then cybersecurity company earnings could keep rising and, thus, so could this ETF's unit price.

Motley Fool contributor Tristan Harrison does not own units of the Betashares Global Cybersecurity ETF.

iShares S&P 500 (AUD Hedged) ETF

What it does: This ETF tracks the performance of the S&P 500 Index (SP: .INX) in the United States.

By Bronwyn Allen: Warren Buffett is the world's most successful investor. He's generated a $100 billion fortune over his lifetime. He researches and invests in companies for a living, yet he admits a lot of his wealth has resulted from just a few really good investment decisions along the way.

One piece of advice Buffett often gives to investors who lack the necessary skills or experience to pick individual stocks is to simply buy the index. Specifically, the S&P 500 Index, which tracks the performance of the 500 largest listed companies in the US by market capitalisation.

Conveniently, you can invest in the S&P 500 via ASX ETFs, one of them being the iShares S&P 500 (AUD Hedged) ETF. Since its inception in 2014, this ETF has delivered average annual returns, including distributions, of 9.46%. That sort of growth over a 40 or 50-year investment horizon has the potential to secure you a great retirement. Furthermore, the ETF charges a small management fee of just 0.1%.

Motley Fool contributor Bronwyn Allen does not own units of the iShares S&P 500 (AUD Hedged) ETF.

Betashares Nasdaq 100 ETF

What it does: This ETF seeks to closely mirror the performance of the 100 largest companies in the NASDAQ-100 (NASDAQ: NDX), excluding financials. The newer United States exchange houses many of the biggest and most profitable businesses of today, skewing heavily toward tech companies.

By Mitchell Lawler: Many investors are still anxiously watching the economy to see whether central banks will be able to coordinate a soft landing, or if we'll experience a recession. 

Despite this, I believe there is no greater time to invest than when most people are concerning themselves with the next several months, rather than several years. An ETF, such as the Betashares Nasdaq 100 ETF, offers a low-cost way of dollar-cost averaging through uncertain times. 

The reason I personally favour this ETF is its composition of extremely profitable companies. All top 10 holdings, aside from Amazon at the moment, are raking in billions of dollars in profits at 10% to 35% margins. 

Even in a tumultuous time, I'd argue these tech titans are some of the most antifragile companies on offer globally. 

Motley Fool contributor Mitchell Lawler does not own units of the Betashares Nasdaq 100 ETF or shares in Amazon.com, Inc.

VanEck MSCI International Quality ETF

What it does: This ETF gives investors exposure to a group of high-quality shares from across the world (excluding Australia).

By James Mickleboro: I think the VanEck MSCI International Quality ETF could be a top option for investors in April.

In the current uncertain economic environment, I believe that a focus on quality could deliver results for investors. And this rules-based ETF has bucketloads of quality. 

That's because, to be included in the fund, a company must have low leverage, high earnings growth rates, and high returns on equity.

Among its almost 300 holdings are companies such as Apple, Ferrari, Microsoft, Nestle, Nike, and Visa.

Motley Fool contributor James Mickleboro does not own units of the VanEck MSCI International Quality ETF or have positions in any of the stocks mentioned.

Vanguard MSCI Index International Shares ETF

What it does: The Vanguard MSCI Index International Shares ETF aims to track the MSCI World ex-Australia Index, which covers around 85% of the free float-adjusted market capitalisation of 22 developed markets.

By Brooke Cooper: One of the major upsides to investing in ETFs is, in my opinion, instant diversification.

There are hundreds of ways one can diversify their portfolio – investing in various companies, sectors, or even entirely different markets.

Those specifically interested in geographic diversification might like to take a closer look at the Vanguard MSCI Index International Shares ETF.

It holds 1,473 stocks – 69% of which are listed in the US, demands a 0.18% per annum management fee, and has gained nearly 97% since its inception in 2014.

Some of its top holdings include Apple, Microsoft, and Amazon.

Motley Fool contributor Brooke Cooper does not own units of the Vanguard MSCI Index International Shares ETF or have positions in any of the stocks mentioned.

The post Top ASX ETFs to buy in April 2023 appeared first on The Motley Fool Australia.

One of the biggest goals most Australians strive for is a happy, healthy, and financially secure retirement.

It's a great goal to have because we're living a lot longer these days, so we all need a personal plan as to how we're going to fund two or three decades of retirement after our working lives are over.

Unless you're willing to live on the age pension, which is currently $1,064 per fortnight for singles and $1,604 for couples, you'll need to buy some assets that can deliver reliable passive income and growth.

One investment option is ASX shares.

And you can't buy them soon enough. As Buffett says, time is the secret sauce to investing success.

What is Buffett's best retirement investment strategy?

The chair of Berkshire Hathaway Inc provides really simple, specific advice that you can act upon today.

Here it is.

Buffett's key investment strategy for retirement is to make consistent investments into an S&P 500 Index (SP: .INX) fund throughout your career.

The S&P 500 is the benchmark United States stock market index. It tracks the performance of the 500 largest listed companies by market capitalisation. It's a real-time measure of the health of the US economy.

Owning shares in an index fund is like owning a little piece of every company within that index.

Buffett reckons consistently buying shares in a low-cost S&P 500 index fund regularly is the most practical long-term investment strategy for ordinary investors trying to secure a decent retirement for themselves.

It's simple, it takes little time and effort, and it works.

What are the returns like?

The S&P 500 has averaged about a 10% annual return on investment (ROI) over the long term. There's no guarantee that will continue, but there's no reason to believe this will suddenly change, either.

A 10% annual return is pretty darn good, especially if you start early in your working life. A 20-year-old investor would have 40 years of 10% average gains ahead of them before retirement in their 60s.

Index funds are not as exciting as ASX shares that skyrocket 50% or 100% (or more) some years due to hot thematic investing trends like we saw in 2021 and 2022 with ASX lithium shares.

But if you believe in the tortoise over the hare, and you don't have the time or interest to research ASX shares, select individual stocks, and monitor the health of each business over the long term, an index fund is a great option. You get the benefits of diversification, dividends, and low annual fees all in one.

Buffett considers investing in the S&P 500 as a proxy for investing in the United States economy.

In his annual newsletter released on 25 February, Buffett says:

I have been investing for 80 years– more than one-third of our country's lifetime.

… I have yet to see a time when it made sense to make a long-term bet against America.

How to follow Buffett's retirement strategy using ASX shares

If you want to follow Buffett's advice, you have a few choices.

Firstly, you can invest directly in an S&P 500 index fund via a stockbroker or online trading platform.

For some assistance with this, take a look at our story on how to buy US shares in Australia.

Alternatively, you can buy an exchange-traded fund (ETF) on the ASX that tracks the S&P 500.

An example is the iShares S&P 500 (AUD Hedged) ETF (ASX: IHVV). 

The average annual return including distributions has been 9.46% since its inception in 2014. The hedging mitigates the effects of currency fluctuations between the Australian and US dollars.

The ETF has a management fee of 0.10%.

Or, you can apply Buffett's theory with an Australian flavour, backing our economy over the US economy.

That means buying an S&P/ASX 200 (ASX: XJO) index fund, which exposes you to the top 200 ASX shares by market cap.

The ASX 200 is our benchmark index, similar to the S&P 500 in the US. We're a smaller country, so our benchmark index has fewer companies.

An example is BetaShares Australia 200 ETF (ASX: A200). The average annual return including distributions has been 7.99% since its inception in 2018.

It has a management fee of 0.04%.

But as my Fool colleague Sebastian points out, the Vanguard Australian Shares Index ETF (ASX: VAS) is by far the most popular index fund on the ASX.

It tracks the performance of the S&P/ASX 300 Index (ASX: XKO).

The Vanguard Australian Shares ETF has returned an average of 9.1% per annum including dividends since its inception in 2009.

It has a management fee of 0.10%.

Don't overlook ASX index fund fees

There's very little work involved for the fund manager of an ASX shares index fund, which is why their fees are so much lower than actively managed funds.

Buffett is outspoken about the high fees active managers charge, given that many underperform the S&P 500's average returns over the long run.

All index funds charge relatively low fees. The difference between them may seem negligible right now, but over a lifetime of investing, they can add up to a lot — like, five figures. That's serious money!

What does consistent buying mean?

When Buffett says you need to invest consistently, he's talking about dollar-cost averaging on autopilot.

To grow your wealth without giving your investments much time and attention, you must put your ASX shares investing habits on autopilot.

Your goal is to invest chunks of spare cash into your index fund regularly.

Here are three ways to go autopilot on your investments.

3 ways to put your ASX shares investments on autopilot

Pick a set time interval for investing. Once a month (watch those trading fees, though!), once per quarter, once per year, whatever you are comfortable with. Then don't miss a single one of those intervals. Buy in bear markets, buy in bull markets. Buy no matter what, and let time and the magic of compounding work.

Be disciplined and trust that over time, you will achieve those perfectly healthy average returns and build a great nest egg for retirement.

Secondly, reinvest the dividends your ASX index fund or ETF pays by purchasing more shares automatically.

Most funds have dividend reinvestment plans (DRPs), whereby you tick a box or fill in a form, and the fund manager will organise the automatic purchase of more shares with those dividends for you.

Set and blissfully forget.

Thirdly, set up a salary sacrifice arrangement whereby your employer will automatically deposit part of your pay into your superannuation fund each month.

Many super funds offer index investment options, so talk to your fund manager about this.

The post Help safeguard your retirement with this key Warren Buffett investment strategy appeared first on The Motley Fool Australia.

This latest boost for the ASX appears to be inspired by overseas events as the S&P 500 Index (INDEXSP: .INX) rose 0.3% in response to positive signs for inflation. The iShares S&P 500 ETF (ASX: IVV) (the ASX-listed version) return is negative (by 0.4%) amid a weaker US dollar because it trades in Australian dollars.

What did the latest US inflation numbers say?

According to reporting by CNBC, the consumer price index dropped by 0.1% in December, which is what experts were largely anticipating.

Excluding food and energy, core CPI rose by 0.3% — this was also in line with estimates.

Year over year, headline CPI rose 6.5% and core inflation was up 5.7%. Prices at the petrol pump dropped by 9.4% for the month and are now down 1.5% year over year, according to CNBC.

Retail investors predicted to drive the stock market

In 2020, powered by government stimulus, retail investors collectively played their part in driving the stock market higher after the COVID-19 crash.

Interestingly, Vanda Research has suggested that small US investors appear to be coming back to the stock market and could help push shares higher in the coming months, according to reporting by the Australian Financial Review.

Vanda said in a note:

Retail investors tend to buy equities more aggressively in January and February, following weak net buying in November and December. Moreover, purchases typically see a stronger rebound in January when the S&P500 posts poor returns in December during a down year.

While it is difficult to imagine retail activity jumping 3-7x given the already fourfold rise post-COVID, the continued downtrend in CPI inflation recorded in today's print could usher an improvement in risk appetite from very bearish levels, pushing retail flows towards the high end of the monthly purchases range (max $US29 billion in Aug '22).

This could set off another short-term virtuous loop for equities, drawing, at a minimum, some participation from rule-based systematic investors.

The AFR also pointed out that Vanda noted that retail investors reportedly make more investments going into reporting season:

We expect this historical pattern to repeat over the coming weeks, boosting retail purchases. On the flip side, this means that retail activity could start to wane in mid-February after most of the more prominent companies of the S&P 500 will have reported their Q4 results.

Foolish takeaway

The stock market can be influenced by how much demand there is for buying shares. If there's more demand, it could push up valuations a bit. It'll be interesting to see if Vanda's theory plays out in the next few months.

The post Are nervous investors returning to the ASX stock market right now? appeared first on The Motley Fool Australia.

However, as dividend yields are usually reported on a trailing basis, investors need to be careful that they don't buy shares on the expectation that the last dividend is indicative of what will be paid over the next 12 months.

For example, the three ASX shares listed below show up on many websites as offering 20%+ yields. Is this really the case?

Fortescue Metals Group Limited (ASX: FMG)

On Google, Fortescue shows up with a fully franked 25% dividend yield. While this is accurate based on its FY 2021 dividends, analysts are tipping the iron ore giant to pay a significantly reduced dividend in FY 2022. This is due to a sizeable pullback in the iron ore price and the weaker outlook for the low grade iron ore that Fortescue mines. Goldman Sachs is expecting fully franked dividends per share of US$1.02 in FY 2022 and 61 US cents in FY 2023. This will mean yields of 9.7% and 5.8%, respectively, over the next two financial years. Great yields, but nowhere near the 25% some investors may have been hoping for.

iShares S&P 500 AUD Hedged ETF (ASX: IHVV)

This index-tracking exchange traded fund apparently offers investors a 21% yield at current prices. However, this is even more misleading than the previous example. As my colleague explains in detail here, this ETF periodically rebalances its holdings. This is achieved by selling the shares that have increased outside their index allocations and by buying the shares that go under. This left the iShares S&P 500 AUD Hedged ETF with surplus cash, which is then returned to existing unit holders in the form of dividend distributions. The actual dividend yield provided by this ETF is closer to 1.3%.

Regal Investment Fund (ASX: RF1)

Finally, Regal Investment Fund's shares show up as offering a 25% yield at current prices. However, it is worth noting that this dividend yield is the result of a profit surge in FY 2021 after the fund delivered a whopping return of 62.75% net of fees. This allowed the company to make a significant increase to its full year dividend. However, it is impossible to know if Regal Investment Fund will be able to come close to replicating its success again in FY 2022. As a result, if its dividend were to drop back down to the FY 2020 level of ~23 cents per share, it would mean a yield of 6.8% rather than a 25% yield.

The post Do these ASX dividend shares really have 20%+ yields? appeared first on The Motley Fool Australia.

Take the iShares S&P 500 AUD Hedged ETF (ASX: IHVV). Today, this ASX ETF has a trailing distribution yield of 21.42%. Typically, if an ASX dividend share has a yield of, say, 4%, it's considered a potentially strong income share. But 21.4%? Is this too good to be true?

It's not just that particular ASX ETF either.

Some more high-yielding ASX ETFs

Today, the BetaShares Global Cybersecurity ETF (ASX: HACK) seemingly offers its investors a trailing distribution yield of 9.6%. Not quite as impressive as 21.4%, but still substantial nonetheless.

Or the Vanguard International Fixed Interest (Hedged) ETF (ASX: VIF). It's putting up a trailing yield of 15.05% right now. For the BetaShares Global Sustainability Leaders ETF (ASX: ETHI), a yield of 9.05% is apparently on offer.

By now, you might be smelling a rat here. Most ASX ETF investors know that the US S&P 500 Index (INDEXSP: .INX) is not a market known for its generous dividend payments. So a 20%-plus yield for an ASX ETF covering this index seems very out of place, even if it is hedged.

And interest rates are still at record lows right now (0.1% in Australia) so the Vanguard Fixed Interest ETF should not be offering a yield of more than 15% right now. So what's going on here?

Well, these payments are not true dividend distributions. An ETF works by holding a basket of shares within them. In the case of the S&P 500 ETF above, this is the 500 or so companies in the S&P 500 Index.

Many of these companies pay a dividend so the ETF receives this money and passes it onto its investors. But that's not what's happening for the most part here.

Not all is as it seems…

Another notable feature of an ETF is how it rebalances itself. An ETF normally tracks an index, an index whose underlying shares change in value over time. The ETF needs to take this into account, otherwise it wouldn't be doing its job of faithfully tracking its index.

As such, ETFs, like those above, periodically 'rebalance' themselves. They do this by selling the shares that have increased outside their index allocations and by buying the shares that go under. In times of rising markets, there are usually more winners than losers in this regard.

Because of this, the ASX ETFs in question usually find themselves with a surplus of cash after the rebalancing is complete.

What to do with this extra cash? Send it out the door in the form of dividend distributions, of course. So that's why these ASX ETFs seemingly boast such high trailing yields right now.

So don't get too excited when you see the IHVV ASX ETF pay out a distribution of 21.4%. It can be classed more as a one-off capital return rather than a consistent dividend yield.

Digging a little deeper, and iShares tells us that IHVV's 'true' trailing dividend yield (what it receives from its underlying shares) is actually sitting at 1.41% per annum.

Sorry to burst the bubble.

The post Why do some ASX ETFs have dividend yields of 20% right now? appeared first on The Motley Fool Australia.

Obviously, there will always be domestic happenings that shift the ASX. But generally, you can compare the movements of the ASX 200 to the S&P 500 without much difficulty.

Don't believe me? Take a look at these graphs depicting year-to-date trading of the ASX 200 – represented here by the iShares Core S&P/ASX 200 ETF (ASX: IOZ) – and the S&P 500 – represented by the iShares S&P 500 (AUD Hedged) ETF (ASX: IHVV).

Side by side, it's not hard to see the correlation between the two.

So, why does the ASX trend so closely alongside the US stock market? Let's dive into two potential answers.

Globalisation and the ASX 200

Basically, the ASX 200 doesn't exist in a vacuum. Plenty of US investors invest in the ASX 200, while plenty of ASX 200 companies invest in the US. Not to mention, many companies on the ASX 200 likely do some element of their business with the US or US-owned companies.

Also, the cultural cross over between the US and Australia is significant. You only have to look at how many iPhones are in the hands of Australians or how many Ugg Boots are on Californian toes to know that as individuals we buy into each other's cultures.

This has the potential to get complicated but suffice to say, money and investments flow within and between the two nations. 

Foreign investment means the ASX relies on the US stock market

The US is the largest foreign investor in Australia, according to 2019 data from the Department of Foreign Affairs and Trade. Similarly, Australia's largest foreign investment destination is the US.

Our economies are thus, intertwined in a way that means the US stock market's movements often affect Australia's. Alas, while the US is incredibly financially important to Australia, Australia isn't nearly as important to the US.

According to the US's Bureau of Economic Analysis, while Australia is the US's largest receiver of foreign investment in the Asia Pacific, we don't even figure in the list of its top 10 global investment destinations.

This may be the reason the ASX 200 relies much more on the US market than the other way around. While here in Australia, we watch the Dow Jones Industrial Average Index (DJX: .DJI) and the Nasdaq Composite (NASDAQ: .IXIC) like hawks, but arguably we're just a small island in the ocean to the US market.

The post Why is the ASX 200 (ASX:XJO) so reliant on the US stock market? appeared first on The Motley Fool Australia.

If you dig a little deeper in your own cupboard, you might find Kellogg Company (NYSE: K) cereal or razors made by Procter & Gamble Co's (NYSE: PG) Gillette.

American companies are everywhere in Australian life, often hiding under familiar brands. Take the popular ice creams Paddle Pop and Golden Gaytime. They are actually owned by the British-Dutch company Unilever UN (NYSE: UL), listed in the US.

So it's understandable that Aussie investors might want a slice of the pie. And they do. You can take a look at our coverage of some of the most popular US shares that Aussie are buying.

Recently, we covered how the rising Australian dollar was making investing in US shares more attractive. So if you've never taken the plunge across the Pacific, it might be a good time to have a think about it. There's nothing wrong with our own S&P/ASX 200 Index (ASX: XJO) of course. But the reality is that our market is a minnow in the ocean of global markets. The US markets are, by comparison, a pod of whales. I say a pod because the US has a few different markets you can invest in. Rather than just one major index, like our ASX 200, American investors have a few choices. There's the old-school Dow Jones Industrial Average (INDEXDJX: .DJI), the uber-popular S&P 500 Index (INDEXSP: .INX), and the tech-heavy NASDAQ-100 (INDEXNASDAQ: NDX).

Buying US shares on the ASX

You can always buy US shares directly through your ordinary broker. Many of the most popular Aussie share brokers, like Commonwealth Bank of Australia's (ASX: CBA) CommSec, or National Australia Bank Ltd's (ASX: NAB) NABtrade offer the opportunity to buy US shares like Apple or Netflix directly. There are also newer dedicated US brokers, like the popular Stake, which do the same.

However, if you don't want to buy these shares directly, there are other options. Various managed funds and Listed Investment Companies (LICs) that are listed on the ASX invest in US shares. Some popular examples include the Magellan Global Fund (ASX: MGF) and MFF Captial Investments Ltd (ASX: MFF).

Otherwise, there are always US market-tracking index funds available on the ASX as well. Some examples include the iShares S&P 500 ETF (ASX: IVV), the Vanguard US Total Market Shares Index ETF (ASX: VTS), and the BetaShares Nasdaq 100 ETF (ASX: NDQ). There's also a couple of currency-hedged options for the investor who wants to take currency fluctuations out of the equation. These include the iShares S&P 500 AUD Hedged ETF (ASX: IHVV) and the BetaShares NASDAQ 100 ETF – Currency Hedged (ASX: HNDQ).

Foolish takeaway

For the investor who wants to branch out and invest in US shares, there are more options available than ever. In the end, it just depends on your individual preferences as to which route you wish to take.

The post How to invest in US shares in 2021 appeared first on The Motley Fool Australia.

Investors put in the highest-ever amount of dollars into local ETFs in October, but some products fared far better than others.

A BetaShares report showed cash, bond and fixed interest ETFs featured prominently among the top 10 ETFs that saw the largest inflow of cash last month. 

This perhaps indicated some anxiety with investors about the US election result and sky-high share valuations.

Top 10 hottest Australian ETFs

ETF pioneer Vanguard dominated the top of the charts. 

Its Vanguard Australian Shares Index ETF (ASX: VAS), Vanguard Global Aggregate Bond Index (Hedged) ETF (ASX: VBND), Vanguard Msci Index International Shares Etf (ASX: VGS), and Vanguard Australian Fixed Interest Index ETF (ASX: VAF) collectively brought in about $478 million for the company.

But the most attractive fund of October, iShares Core S&P/Asx 200 Etf (ASX: IOZ), alone pulled in a stunning $326 million of investor funds.

Top 10 coldest Australian ETFs

At the other end of the charts, foreign assets seemed to go out of favour with Australian ETF investors.

The trend could be a validation of the successful suppression of COVID-19 in Australia while the northern hemisphere copped a third wave as it headed into the colder months.

iShares Edge MSCI World Multifactor ETF (ASX: WDMF), iShares MSCI South Korea ETF AUD (ASX: IKO), BetaShares US Dollar ETF (ASX: USD), iShares Europe ETF AUD (ASX: IEU) and Platinum International Fund (Quoted Managed Hedge Fund) (ASX: PIXX) all suffered significant outflows.

BetaShares itself had $34.8 million pulled out of its BetaShares Australian Resources Sector ETF (ASX: QRE), which was the 2nd highest amount.

It's often hard to pinpoint the exact reasons for outflows from a particular ETF, BetaShares head of strategy Ilan Israelstam told The Motley Fool.

"Investors will have their own motivations for increasing or reducing their positions," he said.

"On QRE in particular, our suspicion is that most of the selling was due to investors taking profits, given QRE was up around 34% from its lows in March."

Betashares and AMP Limited (ASX: AMP) recently closed down a trio of ETFs they jointly operate due to a lack of investor interest. Those funds will trade on the ASX for the last time on 4 December.

The last two months have been the only time in history that the Australian ETF industry saw more than $2 billion come inwards each month.

Local ETFs collectively manage $73.8 billion, which is another all-time record.

The post 10 hottest (and coldest) Aussie ETFs right now appeared first on The Motley Fool Australia.

On one level, this is understandable. The US is the largest capital market in the world by far. That's the reason why Aussie tech company Atlassian Inc chose to list on the Nasdaq exchange in America rather than our own ASX. And when you have companies like Apple Inc, Amazon.com Inc, Berkshire Hathaway Inc and Alphabet Inc amongst the US's biggest players, it's hard (at least for many investors) to get excited about top ASX 200 shares like BHP Group Ltd (ASX: BHP) and Westpac Banking Corp (ASX: WBC).

But are US shares really a better option to invest in than our own ASX? Let's look at some numbers.

To compare our 2 markets, we'll look at the performance of some exchange-traded index funds (ETFs).

US shares vs ASX: a trans-Pacific matchup

The Vanguard Australian Shares Index ETF (ASX: VAS) is an index fund that tracks the S&P/ASX 300 Index (ASX: XKO) – a comprehensive barometer of the Australian share market. Over the past 5 years, this ETF has returned an average of 7.33% per annum, and 6.73% per annum over the past 10.

Let's compare that with an ETF tracking the US's S&P 500 Index, the flagship index that most investors use for US markets.

The iShares S&P 500 ETF (ASX: IVV) has returned an average of 13.44% per annum over the past 5 years, and 17.05% over the past 10.

Case closed, right? The US has handily smashed our ASX, so let's all sell our ASX shares and hop on the American bandwagon.

Well, not so fast. See, the IVV ETF is not hedged against currency movements. And our dollar has spent most of the past decade falling in value against the US dollar (remember the days of parity in 2010 and 2011?). That falling dollar has helped push up the returns of the S&P 500 in Australian dollar terms.

So let's instead use a currency-hedged version of the S&P 500 – represented by the iShares S&P 500 (AUD Hedged) ETF (ASX: IHVV). This ETF functions exactly the same as IVV, except it takes this currency factor out of the equation.

So, over the past 5 years, IHVV has returned an average of 12.61%. unfortunately, this ETF has only been around since 2014, so we can't see a 10-year performance. But looking at the US-listed iShares S&P 500 Fund (which is benchmarked to US dollars), we can get a rough idea. Over the past 10 years, that fund has returned an average of 13.68%.

That still looks pretty good against VAS's 10-year average of 6.73%.

Foolish takeaway

It is incontrovertible that US shares have handily outperformed ASX shares over the past 5 and 10 years. However, it's worth noting that all countries have their time in the sun, and the US markets have benefitted enormously from the growth of their large tech companies over the past decade – a feat unlikely to be matched over the next decade in my view. Thus, there's every reason to believe ASX shares will beat the US at various periods in the future. Therefore, I don't think it matters too much which shares or index you invest in. You could even hedge your bets and go with both.

The post Are US shares a better investment than the ASX 200? appeared first on The Motley Fool Australia.

These are the questions we'll be answering today.

If we look at the recent performance of the ASX 200 index (the largest 200 Australian shares) in conjunction with the S&P 500 Index (the largest 500 American shares), some striking resemblances do become apparent.

Just take a look at this graph of the ASX 200 – represented here by the iShares Core S&P/ASX 200 ETF (ASX: IOZ).

Now, compare this with the S&P 500 – represented here by the iShares S&P 500 (AUD Hedged) ETF (ASX: IHVV)

Look familiar?

Digging a little deeper, the ASX 200 and S&P 500 both had their 2020 peaks on 20 February (Australian time).

Then, the ASX 200 fell 36.53% between 20 February and 23 March where it found its bottom for 2020 so far.

The S&P 500? It fell 33.92% over the same period and also found its lowest point for the year on 23 March.

Since then, the ASX 200 has risen approximately 35% off these lows. The S&P 500 is up ~43%.

So we have a same-day peak, a same-day trough and very similar gains and losses in between for both the US and Australian markets in 2020.

My forensic conclusion? Eerily similar.

What does this mean for ASX 200 investors?

As much as we might like to think that our own Aussie markets are independent of the US, the data doesn't suggest this conclusion.

Of course, there will always be localised nuances that move each market independently of the other. But on the 'big issues', it would appear that the American dog is wagging the ASX tail most of the time.

That, in turn, means that we all need to be watching the US markets like a hawk in my view (or more accurately, like a dove). The US Federal Reserve has been pumping an unprecedented amount of cash into the American financial system – far more than our own Reserve Bank of Australia (RBA) has been doing here. This, I think, is partly responsible for the massive rally in US shares we have seen over the past 2½ months. And it will also likely be the most influential force driving the markets over the rest of the year, in my opinion.

So if you're aspiring to be a 'serious investor' but you don't take an active interest in what the US markets are doing, it's probably a good idea to change that habit. As much as we'd like to think of ourselves as 'independent' of the US, the data shows this is not really the case.

The post Does the ASX 200 just follow the US markets? appeared first on The Motley Fool Australia.