How to invest globally via the US markets
Does investing in the US markets give you exposure only to the US economy? Many people believe so, but that’s not exactly true.
Hi, I’m Viram from Vested and today we’re busting a surprisingly common myth about the US investing.
The myth is that by investing via the US stock exchanges you only get exposure to the American economy. That is false. The US stock exchanges are actually a very good gateway to investing across the world.
First and foremost, the US exchanges list leading global companies from the European as well as Asian markets. They do this via a concept called American Depository Receipts. These Depository Receipts are issued in the US and allow you to buy the underlying companies listed outside of the US across multiple exchanges globally all of it in $$.
Secondly, ETFs are also an amazing way to invest globally through the US markets. In ETFs we particularly are excited about two types of ETFs: First are global equity or bond ETFs and Second are global industry ETFs.
Now, let’s take the Vanguard Total World Stock ETF for example. This ETF invests in stocks across the world which means that the ETF gives you access to leading global companies while mitigating any single-country risks.
It tracks the performance of the FTSE Global All Cap Index, which covers both well-established as well as still-developing markets. Similarly, Vanguard’s Total World Bond ETF gives you access to global bonds while the iShares Global 100 ETF tracks the top 100 countries in the world!
On the other hand, via the US markets you can also bet on upcoming sectors globally! If you think, for example, that Clean Energy or Metals as an industry are going to grow over the next few years. You can make your investment in global companies within that sector. A couple of such global sector ETFs that you can look at are Global Clean Energy iShares (ICLN) or the iShares MSCI Global Silver and Metals Miners ETF (SLVP) which invests in mining companies across the world.
So, to summarise, the US stock market is actually a great gateway to global investment opportunities. You can invest in global stock ETFs and bond ETFs or in ETFs with leading global companies or the companies directly themselves via ADRs and also make sector-wise bets.
Stay tuned for more!