Buying U.S ETF's

[froggyfan1]

Apologies for what may be a dumb question.

But is it worth investing in American ETF's such as VOO, SPY and IVV. Are the fees of the currency conversion going to out weigh some potential gains?

What are benefits and cons to investing in those funds from and Australian taxpayer stand point?

What's funds would you recommend looking into?

Thanks alot in advance.

 

[michael1982]

@froggyfan1 1) You could buy US Market ETFs on the ASX but it will include currency fluctuations (take that as you may, since if you plan to spend AUD you’ll need to convert it at some point anyway) unless you buy FX hedged ETFs.
2) W8BEN form - not a big hassle to refill every 3 years, otherwise your dividends at taxed @ 30% (instead of 15%) prior to distribution.

I personally buy ASX US ETFs (eg VTS on ASX instead of VTI) just out of preference for easier tax return. But services like sharesight help deal with conversions and tax fill-outs anyway.

 

[elladitsa]

@michael1982 Are discrepancies in taxation (I.e. 30% vs 15%) smoothed out after filing a tax return, or are these taxed funds simply lost unless the W8BEN is completed? Thanks!

 

[michael1982]

@elladitsa Ur correct, ull get shafted by marginal tax brackets anyway (unless you’re under 30% ofc)

 

[rausachhanoi]

@froggyfan1 Majority of my investments are in US ETFs and stocks, most definitely outweighs fees/currency conversions. I couldn’t imagine even making 10% of my earnings on the Aus market.

SPY was my main etf, I’ll get back to you with my others when I’m home

 

[elakhim]

@froggyfan1 If you use interactive brokers, the currency conversion is basically the spot rate, you wouldn't even lose 0.2% from that.

Yeah SPY is pretty much set and forget and you can even do some covered calls if you're feeling spicy.

 

[jjddww]

@froggyfan1 If you want exposure to SPY/IVV you might want to have a look at ASX: IHVV. It's a Blackrock fund holding IVV but traded on the ASX. It's also hedged against currency movements through currency forwards so you don't have to worry about fluctuations in the AUD/USD if that's something you prefer not worrying about. Management fee is 0.1% though - so it's triple the IVV or around the same as SPY (already a pricey fund).

 

[naiduindia]

@jjddww IHVV is the version hedged to AUD. IVV is also available on the ASX unhedged at a MER of 0.04%. Suggest that or VTS if you want US exposure without the hassle and cost of FX

 

[eire40]

@froggyfan1 Register an interactive brokers account. Invest in VOO. Sleep and earn.