Why invest internationally?
Investing in Australian bonds and shares may seem like a safe bet, but by always favouring local investments you may be limiting your investment opportunities. International exposure is essential for a well-diversified portfolio, and VanEck’s ASX-listed ETFs help Australian investors access these opportunities.
International investing is an investment strategy that involves selecting investments that are domiciled overseas and including these as part of an investment portfolio.
Investing internationally helps expand diversification and distribute investment risk across more markets, more sectors and more companies.
For example, for international equities, there is a world of investment opportunities for those who look beyond the ASX. Investors can access tech giants like Microsoft and Nvidia, multinational pharmaceuticals like Pfizer, and clean energy leaders like Denmark's Orsted.
There are also a multitude of companies and industries overseas that either don't exist or have a very limited offering in Australia. Through ETFs, Australian investors can now access these opportunities on ASX.
How to access international markets
For most Australian investors, investing internationally through managed funds or ETFs is the easiest option. Not only do you get the benefits of diversification, but investing through a fund or ETF is also generally cheaper and easier since you don't have to worry about the costs and timing considerations involved in trading on international exchanges.
ETFs have the additional benefits of full transparency as well as being able to be traded on ASX without the need to complete unwieldy application forms or withdrawal forms.
International investment strategies
Investing in international markets generally falls into two classifications:
International developed markets:
These are countries that have established industries, widespread infrastructure, generally secure economies and a relatively high standard of living.
Examples of developed international markets include the United States of America, the United Kingdom, New Zealand, Japan, Canada, and France.
Emerging markets:
Emerging markets is a term that originated in the 1980s and is often used to describe countries or regions undergoing fast economic growth. The term emerging markets describes countries that are undergoing growth and industrialisation.
Emerging markets are a big and assorted universe of economies and markets each with their own political and economic cycles.
Examples of emerging markets include India, China, Egypt, South Africa, Mexico, and Brazil.
Emerging markets are more volatile than developed markets and have a wider range of potential outcomes.