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Invest internationally

Discover how you can invest in overseas companies and access international markets via ETFs

 

There is a world of investment opportunities for those who look beyond Australia. Investors can access tech giants like Microsoft and Alphabet, 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.

What is an ETF?

ETFs are managed funds that trade on ASX, just like shares. However, while a share represents an investment in one company, ETFs enable you to invest in many companies or assets in one trade, saving you time and money.

What are the benefits of investing internationally?

 

  • Greater choice
    Australia makes up only 2%1 of the world’s share market. Investing globally can give you access to economic superpowers like China and the US, and companies like Apple and Amazon which are bigger (by market size) than the entire Australian share market combined.


  • Improves risk management
    A golden rule of investing is “diversification”. That is, ensuring your investments are spread across a number of markets and sectors. Expanding your portfolio to include international markets can decrease overall risk as it lowers the reliance on one specific market (ie Australia) generating all of your return.


  • Reduces concentration in your portfolio
    Australia’s share market is dominated by a handful of companies and sectors. The top 10 companies (by market cap) account for over 40% of the S&P/ASX 2002. This means investors who take the typical market cap approach have “concentrated” portfolios as performance will be dominated by just a few companies and sectors. Introducing an international allocation is one way of reducing such concentration.


  • Growth potential
    The biggest contributors to global growth are found outside of Australia. In 2020, China was the only major economy to record economic growth3.

 

What else should you know?

As with any investment, it’s important to understand the risks. Investing overseas carries many of the same risks associated with investing in Australia but with a few others including currency volatility, different regulatory and tax regimes, and markets trading at different times to ASX. We always recommend speaking to a financial adviser or broker to understand what investments suit your individual needs and objectives.

 

 

1. Statista, Distribution of countries with largest stock markets worldwide as of January 2021, by share of total world equity market value

2. FactSet, as at 31 December 2020

3. WSJ.com, China Is the Only Major Economy to Report Economic Growth for 2020, 18 January 2021

# In determining each month’s dividend VanEck will target an annual dividend yield for the fund of 5% p.a. of the capital invested at the beginning of the year. Dividend yields may differ for individual investors. From time to time we may amend this target.