Australia's S&P/ASX200 index (INDEXASX: ^AXJO) (ASX: XJO) has some world-class companies on it, global businesses like CSL Limited (ASX: CSL), Macquarie Group Ltd (ASX: MQG), and BHP Billiton Limited (ASX: BHP).
The USA has more. Every investor should look to add some international diversity to their investments, and one of your first targets should be the USA, home of the biggest and most powerful businesses in the world. An easy and low-cost way to do this is to own an index-tracking Exchange Traded Fund, or ETF.
One ETF that I find attractive is the BETANASDAQ ETF UNITS (ASX: NDQ) which is a product that aims to track the Nasdaq-100 index.
The Nasdaq 100 contains many of the world's biggest companies like Microsoft, Alphabet (formerly Google), Facebook, Apple, Amazon, Netflix, and more. Over half of the index (and this ETF) is in information technology, which generally means strong economic moats and wide profit margins. Other businesses on the list include consumer titans like Starbucks, Costco, or Kraft Heinz:
The management fee for the ETF is 0.48% per annum and it pays a measly 0.6% dividend.
Now, no investment comes without risk. The assets the ETF holds (and which you are buying, indirectly) are in US Dollars, which exposes you to changes in the value of the Australian Dollar. The US market could fall, and many US stocks including those in the NASDAQ look expensive. Unfortunately, low interest rates and enthusiasm about possible corporate tax cuts have driven stock prices through the roof. You are also exposed to the fortunes of the bigger companies in the index, such as Apple, which makes up 12% of the index on its own:
For reasons of price, I'm wary of buying this ETF right now. I'd prefer to wait for a few US interest rate rises (these being typically correlated with lower stock prices) before considering a purchase. Long term investors (think 10 years) should keep the Betashares Nasdaq ETF on their watch list, as it appears an easy and simple way to add powerful global diversification to your portfolio.
