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International Shares

The Best ETFs global or international shares sector includes ETFs, managed funds and index funds that cover international equities/share markets. The most popular international shares markets for ETFs include:

  • The USA
  • Europe & the UK
  • Emerging Markets (EM)
  • Asia (including China)

With around 98% of shares listed on markets outside of Australia, we think it's vital for Australian investors to consider looking abroad for exposure to some of the world's best companies, including those from the technology, communications and health care sectors.

Performance Characteristics

Over the ultra-long-term, international shares have proven to be among the best-performing asset classes. However, it is also one of the riskier investments you can make, as measured by standard deviation or volatility.

Hedged or Unhedged?

When you're investing in international ETFs, it's worth noting whether or not you're prepared to take on the risk that the currency moves in your favour or against you. Typically, you'll have two options:

  1. Hedged ETFs will attempt to 'lock-in' the exchange rate at the time you make your investment
  2. Unhedged ETFs do not provide protection against movements in the currency

Which one is better? That's up to you.

Just keep an eye on the costs of the hedged versus unhedged versions of the strategy/ETF and consider your own risk profile.

Note: you should always consult a licensed and trusted financial adviser before doing anything. This information is factual information and should not be considered financial advice.

Taxes

Finally, take note of where your international ETF is 'domiciled' by reading its PDS or the ETF Issuer's website because this -- sometimes hidden -- feature could meaningfully affect your tax.

  • Australian domiciled ETFs - these are registered and regulated in Australia and are 'Australian residents' for tax purposes. These are just like an ordinary share or ETF you would buy on the ASX and the tax paperwork is filled out by the fund manager at the fund level.
  • Foreign domiciled, 'cross-listed' or CDI ETFs - these ETFs are registered offshore and provide a beneficial interest to investors via a 'CDI' listing on the ASX. Sometimes these ETFs may require additional paperwork for taxes, such as filling in a US W8-BEN form to reduce withholding tax or expose ETF investors to foreign regulation or U.S. Estate Taxes.

Consult with your tax and/or financial adviser before investing.

International Shares Sector Risks

According to academic study, when you invest globally, you may be lowering some of your risks. For example, you won’t have all of your eggs in your ‘Australia basket’.

However, there are extra risks added when you invest overseas. Some of these risks include:

  • Sovereign/regulatory risks – Governments and regulators throughout the world can change their policies on investing, taxes and even the rights of people and investors. Australia has a very stable and robust financial, legal, political and societal system — many countries don’t.
  • FX/currency risks  A big reason many investors put their money overseas is to get exposure to another country’s currency. For example, if you invest 1 AUD into US Dollars at a currency exchange rate of 1.00, you will get 1 USD in return. If the USD gets stronger (meaning the Aussie dollar exchange rate falls), your 1 USD is now worth more! However, it can go the opposite direction. For example, if the AUD-USD goes to 1.10, your 1 USD (bought at a lower exchange rate) is now worth less in AUD terms than before. This risk is the reason why some ETFs are currency ‘hedged’ — to avoid the impact of currency fluctuations.
  • Counterparty risk  & holding structure – Some ETF issuers use complicated holding structures to get you exposure to the underlying investment overseas. In Australia, ASX-listed shares and ETFs use the same system to ‘settle’ transactions and ‘hold’ your ETFs in your name, it’s called the CHESS system. However, if the ETF invests in overseas shares it’s likely those shares will be held using another system or holding structure governed by other rules. Rest assured there are some safeguards in place. But you should always do your research, read the ETF’s Product Disclosure Statement (PDS) or consult a licensed financial adviser.
  • Timezone – Often, global sharemarkets will be open when you’re asleep. Conversely, Australian sharemarkets (where you buy into the ETFs) operate when the rest of the world is asleep. That makes tracking the latest ETF prices a little more difficult for you and for ETF issuers. This could lead to changes in the ‘unit price’ or the “net asset value” (NTA) of the ETF overnight.

You should always consult a licensed and trusted financial adviser before doing anything. This information is general information and should not be considered personal financial advice.

List of International Shares ETF

Magellan (ASX:MGOC) ETF. Formerly the MGE Active ETF, the Magellan MGOC Fund is an actively managed portfolio that invests in a select array of international companies. The fund typically selects between 20-40 global equities.
VanEck (ASX:ESPO) ETF. The ESPO ETF invests in the world’s largest companies involved in global video game development, eSports, related hardware, and software by aiming to track the performance of the MVIS Global Video Gaming and eSports Index.
VanEck (ASX:HLTH) ETF. The HLTH ETF invests in shares of international healthcare companies which offer growth ‘at a reasonable price’. Meaning, the ETF aims to invest in shares according to the common GARP methodology.
VanEck (ASX:GOAT) ETF. The GOAT ETF tracks the performance of the Morningstar Developed Markets ex-Australia Wide Moat Focus Index. The index invests in 50 to 100 ‘wide moat’ companies, as defined by Morningstar, whose competitive advantages will provide excess returns for 20 years or more.
Montaka (ASX:MKAX) ETF. The Montaka Global Extension fund is a listed managed fund which aims to offer investors exposure to long-term structural winning companies in attractive industries. Typically, the MKAX fund aims to hold 15 to 30 long positions in companies which are medium to large cap, together with 10-40 stock-specific short positions.
ETF Securities (ASX:SNAS) ETF. The ETF Securities Ultra Short Nasdaq 100 Hedge Fund (ASX: SNAS) is an ETF designed for trading, since it provides a negative (or ‘inverse’ or ‘opposite’) exposure to the popular Nasdaq-100 index.
ETF Securities (ASX:LNAS) ETF. The ETF Securities Ultra Long Nasdaq 100 Hedge Fund (ASX: LNAS) ETF is an ETF designed to provide amplified or ‘geared’ exposure to the popular NASDAQ 100 stock market index.
BetaShares (ASX:HETH) ETF. The BetaShares HETH ETF provides investors with a currency-hedged exposure to a diversified portfolio of global companies that fit within the environmental, social and governance (ESG) framework set, along with screening out companies with significant exposure to fossil fuels. HETH has been certified by the Responsible Investment Association Australasia (RIAA), as part of the Responsible Investment Certification Program. The HETH ETF invests in teh BetaShares ETHI ETF.
BetaShares (ASX:HNDQ) ETF. The BetaShares Nasdaq 100 ETF invests in 100 of the largest non-financial companies listed on the NASDAQ stock exchange (i.e. the USA). This is the currency hedge version of the BetaShares NASDAQ 100 ETF (ASX: NDQ).
ETF Securities (ASX:ZYUS) ETF. The ETF Securities ZYUS ETF provides investors with exposure to a portfolio of 50 high-yielding companies from the S&P 500.
BetaShares (ASX:HQLT) ETF. The BetaShares HQLT ETF seeks to provide investors with exposure to a basket of 150 companies that exhibit factors which make them ‘high quality’. The HQLT is hedged to Australian dollars.
Vanguard (ASX:VISM) ETF. The Vanguard VISM ETF provides investors with exposure to a diversified portfolio of small-cap companies from developed countries around the world, excluding Australia.
Vanguard (ASX:VMIN) ETF. The Vanguard VMIN Fund is an actively-managed ETF which aims to provide lower volatility than the broader global equity market by investing across many markets and industries.
Vanguard (ASX:VTS) ETF. The Vanguard VTS ETF provides investors with broad, diversified exposure to the US market. The ETF is not hedged, meaning investors are also exposed to exchange rate fluctuations.
Vanguard (ASX:VVLU) ETF. The Vanguard VVLU Fund is an actively-managed ETF which invests in small, mid and large-cap companies across global equity markets, focusing on companies which have low prices relative to fundamental measures of value.
Switzer (ASX:WCMQ) ETF. The WCMQ Fund is issued by Switzer and investments are managed by WCM Investment Management. WCMQ uses an active investment approach and invests with high conviction in shares of companies that its investment team deem to be high-quality, growth-style companies.
SPDR (ASX:WDIV) ETF. WDIV invests in shares of global companies that have a strong track record for paying dividends to their investors (i.e. they have paid a dividend for at least 10 years in a row).
iShares (ASX:WDMF) ETF. The iShares WDMF ETF invests in a diversified portfolio of global equities using a specific rules-based multifactor strategy. According to iShares, the four key factors used to select companies for this ETF are quality (financially healthy firms), value (inexpensive stocks), size (smaller companies) and momentum (trending stocks).
SPDR (ASX:WEMG) ETF. WEMG invests in shares of medium and large companies listed on stock markets from approximately 20 emerging markets.
BetaShares (ASX:WRLD) ETF. The BetaShares WRLD ETF provides investors with exposure to an actively managed portfolio of global shares, seeking to reduce volatility and defend against losses in declining markets.
iShares (ASX:WVOL) ETF. The iShares WVOL ETF provides exposure to the performance of developed share markets that, on the whole, have lower volatility characteristics relative to the broader global developed share markets.
SPDR (ASX:WXHG) ETF. The SPDR WXHG Fund invests in shares of larger companies listed on stock markets outside of Australia, and provides a hedged exposure.
SPDR (ASX:WXOZ) ETF. The SPDR WXOZ Fund invests in shares of larger companies listed on stock markets outside of Australia, without hedging.
Vanguard (ASX:VGMF) ETF. The Vanguard VGMF Fund is an actively-managed ETF providing investors with exposure to a portfolio of global companies selected using a rules-based, quantitative approach.
Vanguard (ASX:VGS) ETF. The Vanguard VGS ETF provides exposure to listed companies from developed markets around the world, excluding Australia. This ETF is not hedged so it is exposed to currency fluctuations.
Vanguard (ASX:VAE) ETF. The Vanguard VAE ETF provides exposure to a portfolio of companies listed in Asia, excluding Japan, Australia and New Zealand. As the ETF is not hedged, investors are also exposed to currency fluctuations.
Vanguard (ASX:VBLD) ETF. The Vanguard VBLD ETF gives investors exposure to a range of infrastructure securities listed in developed markets around the world. This ETF also provides exposure to currency fluctuations as it is unhedged.
Vanguard (ASX:VEQ) ETF. The Vanguard VEQ ETF provides investors with exposure to a diversified portfolio of large-cap companies listed in major European markets.
Vanguard (ASX:VESG) ETF. The Vanguard VESG ETF provides investors with exposure to a broad range of companies from developed economies around the world, while excluding companies involved with fossil fuels, alcohol, tobacco, gambling, weapons, nuclear power, and adult entertainment.

Something missing?

This brilliant (and free!) report is issued by Best ETFs Australia, a division of The Rask Group Pty Ltd. It is not a recommendation.
Speak to a financial professional before relying on this information and please read our Financial Services Guide (FSG).

General Financial Advice warning
The information on this website is general financial advice only. That means, the advice does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. Please read our Terms & Conditions and Financial Services Guide before using this website.

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