It’s time to determine which ETFs to buy now that you have your brokerage account. Whether you’re looking for the best ETFs we’ve listed below or want to look for others on your own, there are a few options.
Can foreigners own US ETFs?
Foreign investors are permitted to purchase mutual funds in the United States. If a foreign investor chooses to execute their acquisition through an American brokerage business, they must first register with the IRS.
Is it possible to buy US ETFs in Australia?
Investing in multinational corporations was once prohibitively expensive. Many internet trading platforms now allow Australian investors to purchase and sell shares in Australia, the United States, and other overseas markets for less than $10 in brokerage fees each transaction. There are even a couple that don’t charge a brokerage fee at all (see below).
Some companies exclusively sell Australian stocks, or they charge exorbitant fees for the service. It’s crucial to check which nations are on the books and what the associated fees are before signing up for a new account or broker.
Each platform operates in a unique way. However, the same general guidelines apply as when purchasing Australian stocks, with a few exceptions. When you trade shares, for example, you’ll be charged a brokerage fee as well as a foreign exchange (FX) cost. On international accounts, brokerage fees are sometimes greater, and there may be additional expenses, such as an inactivity fee.
Alternatively, you can use exchange traded funds to invest in a basket of US companies (ETFs). You can learn more about ETFs by reading our guide or visiting our best ETFs page.
Zero brokerage trading accounts
When trading US equities, several share trading platforms in Australia currently charge no brokerage fees. This is the price that your broker normally charges you every time you make a trade, and it can range from $0 to $50 per transaction.
As a result of increased competition, some brokers have eliminated this fee entirely, instead charging a minor foreign currency cost when converting AUD to USD. As of 2022, below is a list of zero brokerage trading platforms for US stocks:
The fact that you don’t have to pay commissions to trade on these platforms doesn’t mean they’re completely free.
To trade AUD to USD, you’ll still have to pay a currency conversion fee, which is usually calculated as a percentage of your deposit. You may also be required to pay recurring account fees as well as a “custody” cost, which is occasionally waived if you make a certain amount of trades each year.
To hold your US shares, Australian apps must utilize a US-based custodian. A portion of your property is usually paid as an annual custody fee.
Invest in a US-themed ETF
Investing in an ETF that owns US stocks is an alternative to owning shares listed in the United States. ETFs are stock exchange-traded funds that carry a diversified portfolio of stocks.
They’re simple to obtain because they’re traded on a stock exchange, just like stocks.
Many ETFs that track the US stock market are listed in Australia. You don’t need a share trading platform with Wall Street access to buy in because they trade on the Australian Securities Exchange (ASX). The following Australian exchange-traded funds (ETFs) track the US stock market:
How do I compare trading platforms?
When comparing the advantages of US share trading platforms, make sure to evaluate the following characteristics and questions:
- What is the cost of brokerage? When you place a trade on US stocks, compare the fees charged by each provider. Keep in mind that broker costs for ASX-listed stocks will be different.
- What is the current rate of exchange? Exchange rates vary each platform, and this will be utilized to offset low broker fees in part. First, determine what these are.
- Is there a monthly cost you’ll have to pay? Some platforms charge a monthly fee to keep your account active or to have access to particular features.
- What is the format of market data? Check how current each platform’s market data is being able to make trades based on current information is crucial.
- How many international marketplaces are you able to tap into? Some platforms allow you to buy and sell shares on a limited number of international exchanges, while others allow you to buy and sell shares on a significantly greater number of exchanges.
- How user-friendly is the platform? Is it quick, easy, and convenient to place a transaction and track market activity?
- What kind of trading choices are there? Is the platform only available online, or may trades be made over the phone? Are there any flexible choices, such as limit orders, that allow you to profit from market fluctuations?
- Are there resources for teaching and research? Because trading stocks is complicated, does the platform provide the tools you’ll need to improve your financial knowledge?
- Is there customer service if you need it? When and how can it be accessed?
Can UK residents invest in US ETFs?
You’ve found the ideal US ETF, but it’s unavailable in the UK. While it is feasible to register an account with a US broker if you live in the UK, you will be refused access to US-listed ETFs (even if you are a US citizen) due to the regulation’s “extra-judicial reach.”
Can you buy ETFs in the United States?
Your ETF assets may be subject to US estate tax when you pass away. This is even worse, with a 40% penalty on amounts over $60,000. It’s easy to see why Al Capone was so eager to avoid paying his IRS debt. You can avoid it as well, but only if you don’t breach the law. It’s actually fairly straightforward. Simply look up the domicile of any ETF or mutual fund before purchasing it. The difficulty is that many expats are unaware that this is a problem and are so caught off guard. Ideally, you should only invest in ETFs based in Europe. You can take a deep breath if they have UCITS in their name. This is a cross-European regulatory framework for mutual funds that stands for Undertakings for the Collective Investment in Transferable Securities. UCITS provide you peace of mind because they are supposed to be safe and well-regulated. This is true for funds based in EU countries such as Luxembourg and Ireland.
Top US ETF providers like iShares and Vanguard have their ETFs domiciled in Dublin, Ireland, and then traded on the London Stock Exchange. When you buy an ETF with an Irish domicile, the withholding tax on US stocks is reduced from 30% to 15%. When other countries invest, it drops to zero. Because Ireland and the United States have a tax treaty, UCITS funds are not subject to a local withholding tax. Irish-domiciled funds are likewise exempt from US estate taxes. Even better, unless you are genuinely resident in Ireland, you will not be subject for Irish gift tax, capital gains tax, or inheritance tax on your ETFs. Check the ticker symbol for your ETF to assist you choose the proper domiciliary. The ticker for the Vanguard S&P 500 ETF in its US-domiciled version is VOO, but the ticker for the Vanguard S&P 500 UCITS ETF in Dublin is VUSA.
Even if you eliminate US-domiciled funds, you’ll still have a large selection of ETFs to pick from, which should be plenty for most investors. If you prefer US dollars, you can still buy ETFs denominated in that currency. One disadvantage is that because of economies of scale, charges on US money are slightly cheaper. Vanguard S&P 500 ETF (VOO) has a 0.03 percent expense ratio, while Vanguard S&P 500 UCITS ETF (VUSA) has a 0.07 percent expense ratio. However, the additional cost is more than covered by the tax benefits. After the St Valentine’s Day massacre, in which Al Capone’s men shot and killed seven members of rival mobster Bugs Moran’s group, he got away with murder. IRS “T-Men” imprisoned him for 11 years in 1932 on 22 counts of federal income tax evasion. Although the T-Men may not pursue you with the same zeal, you should avoid US-domiciled ETFs just in case.
Vanguard is available to non-US nationals.
Each of the investment products and services mentioned on this website is intended for use by residents of the United States. This website is not intended to be a solicitation or offer for any investment product or service in any jurisdiction where such solicitation or offer would be illegal. International visitors are encouraged to visit Vanguard’s Global Investors site for further information on the goods and services available to them.
How to start investing
- If your index fund is an exchange-traded fund (ETF), you can buy it from an online broker (see below).
- Apply to invest through the fund manager if your index fund is an unlisted managed fund.
You can invest in index funds through a fund manager, a full-service broker, or an internet share trading platform if you already know what they are. Exchange-traded funds (ETFs), which are traded on the Australian Securities Exchange, are one of the simplest and cheapest ways to invest in index funds (ASX).
The table below lists some of the share trading platforms available for index fund access.
How do I purchase an IPO in the United States from Australia?
If you’re thinking about investing in an IPO, there are a few points to keep in mind:
- To invest, you must fill out an application form available in a prospectus, which you may normally receive from your broker. Some brokerage houses receive larger allocations than others due to their floats.
- There may be a maximum number of shares you can subscribe to or a minimum number of shares you can subscribe to.
- In most cases, you’ll need to fill out an application form and submit a check or set up a Bpay or direct deposit.
- You may only have a set amount of time to complete and submit your IPO documentation, usually about three weeks.
- It’s possible that you won’t know how many shares you’ve been given until the float date. If an IPO is oversubscribed, you may be unable to participate if you wait too long to submit your documentation.
Are ETFs in the United States Ucits-compliant?
When PRIIPs and MiFID II rules went into effect at the beginning of 2018, European-domiciled UCITS ETFs were ready with their new KIDs. US-domiciled ETFs, on the other hand, did not comply, and because they primarily serve the US market, creating EU-approved information at their own expense is not a priority for them.