Dipping a toe in global equities
Australian retail investors typically view global equities with caution due to tax, administration and currency issues, says State Street head of exchange-traded funds (ETFs) Amanda Skelly.
The US Foreign Account Tax Compliance Act (FATCA), particularly, is putting Australians off investing overseas, said Skelly.
State Street has announced the launch of two Australian-domiciled global equities ETFs that are designed to allay investors' fears and make it easier for retail investors to gain some overseas equities exposure, she said.
The SPDR S&P World ex-Australia fund will begin trading on the Australian Securities Exchange (ASX) in the coming weeks. The SPDR World ex-Australia (Hedged) fund will follow shortly after, according to State Street Global Advisors.
Skelly said the new ETFs differ from other global equities products available in Australia in that they were built "in Australia, for Australians from the ground up".
"They weren't built in the US and cross-listed here [as is the case with the BlackRock and Vanguard products] — they're primarily listed on the ASX," said Skelly.
The fact that the funds have are ‘ex-Australia' means there is no overlap in investors' portfolios, she added.
One obvious benefit of the funds is that they give investors access to sectors that have little exposure on the ASX, Skelly said.
The IT sector has a 15 per cent representation in the State Street ETFs, as opposed to a less than 1 per cent exposure in the Australian market, she said.
Both ETFs track securities in the relevant hedged or unhedged versions of the S&P Developed ex-Australia LargeMidCap Australian dollar indices, "which include large and mid-cap stocks from 25 developed countries", said a State Street statement.
"For the first time investors will be able to access approximately 350 international equities through an ETF priced in Australian dollars and listed solely on the ASX," said Skelly.
Recommended for you
Specialist global equities manager Nanuk has celebrated 10 years of its flagship New World Fund and is actively considering its next possible vehicle.
Australian equities manager Datt Capital has built a retail-friendly version of its small-cap strategy for advisers, previously only available for wholesale investors.
The dominance of passive funds is having a knock-on effect on Australia’s M&A environment by creating a less responsive shareholder base, according to law firm Minter Ellison.
Morningstar Australasia is scrapping its controversial use of algorithm-driven Medalist ratings in Australia next year and confirmed all ratings will now be provided by human analysts.
