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View Full Version : Time for an update - investing overseas from NZ



heisenberg
15-10-2013, 10:02 AM
Greetings all, :)

I'd like to revisit what seems to be an age-old discussion on this forum - investing in overseas shares from NZ.
I've had a look through the majority of threads on the forum regarding this topic however a lot of the information is outdated, or the stuff which is really applicable to my situation is scattered amongst a dozen of different threads.

What I would appreciate is concise, clear, practical advice about exactly how to go about directing in overseas shares from NZ as a relatively new investor hoping to expand my portfolio to include global shares.

What are your experiences/current practices/opinions?

To give you a bit of background about my situation: I'm mid-20's with a small nest egg ($10-20,000), built up after finishing university. I'm looking mainly for capital growth with a view to building a decent retirement fund over the next 40 years. I plan to drip feed ~$1-2,000 per month into my investments and given my age, will have >90% in shares in these early years. I aim to have ~50% of these in australasian shares and 50% globally. At this stage I am mainly going to focus on passive funds/indexes and ETF's as I do not have vast amounts of time to research companies and am happy to let my money (hopefully) grow steadily over time rather than sitting idly in a bank account. I prefer an DIY approach and am not overly keen to give a decent proportion of my money to a broker, but will consider a managed fund if this is recommended for investing overseas. I am currently a member with ASB securities and will do my NZX/ASX trading through them.

It all seems to get a bit trickier when it comes to investing globally.

The options which I see as currently available include:
1. Direct investment into overseas shares via ASB securities - comparatively expensive (~$90/trade), which is a big chunk out of the relatively small investments I'll be making initially.
2. ETF's on the NZX/ASX - none on the NZX now that AMP WiNZ is closed; more on ASX but there is the risk with double currency exposure, and the initial deposit fee can also be expensive.
3. UK investment trusts on ASB securities - could be an option, but again, expensive
4. Fund manager, especially one focused on ETF's such as Pathfinder
5. Setting up a separate online account via E-trade or optionsexpress - I don't know too much about this but have seen it mentioned quite a few times on ST.

As mentioned, I am a fairly new investor so the above information may be incorrect, misguided or incomplete, so I apologise for this and would appreciate if there are any corrections to be made.

Hopefully with your guidance I can make a final decision about the best way for me to gain access to overseas shares.
Thanks all!

born2invest
15-10-2013, 11:55 AM
I am mainly going to focus on passive funds/indexes and ETF's

I prefer an DIY approach

will consider a managed fund

Well which one do you want? You said you like DIY but you like managed funds also?

Why not just invest in an overseas low cost index type fund? My kiwisaver is with Superlife and they offer the service.

BIRMANBOY
15-10-2013, 12:38 PM
You could look at this for NZX....http://www.smartshares.co.nz/

Greetings all, :)

I'd like to revisit what seems to be an age-old discussion on this forum - investing in overseas shares from NZ.
I've had a look through the majority of threads on the forum regarding this topic however a lot of the information is outdated, or the stuff which is really applicable to my situation is scattered amongst a dozen of different threads.

What I would appreciate is concise, clear, practical advice about exactly how to go about directing in overseas shares from NZ as a relatively new investor hoping to expand my portfolio to include global shares.

What are your experiences/current practices/opinions?

To give you a bit of background about my situation: I'm mid-20's with a small nest egg ($10-20,000), built up after finishing university. I'm looking mainly for capital growth with a view to building a decent retirement fund over the next 40 years. I plan to drip feed ~$1-2,000 per month into my investments and given my age, will have >90% in shares in these early years. I aim to have ~50% of these in australasian shares and 50% globally. At this stage I am mainly going to focus on passive funds/indexes and ETF's as I do not have vast amounts of time to research companies and am happy to let my money (hopefully) grow steadily over time rather than sitting idly in a bank account. I prefer an DIY approach and am not overly keen to give a decent proportion of my money to a broker, but will consider a managed fund if this is recommended for investing overseas. I am currently a member with ASB securities and will do my NZX/ASX trading through them.

It all seems to get a bit trickier when it comes to investing globally.

The options which I see as currently available include:
1. Direct investment into overseas shares via ASB securities - comparatively expensive (~$90/trade), which is a big chunk out of the relatively small investments I'll be making initially.
2. ETF's on the NZX/ASX - none on the NZX now that AMP WiNZ is closed; more on ASX but there is the risk with double currency exposure, and the initial deposit fee can also be expensive.
3. UK investment trusts on ASB securities - could be an option, but again, expensive
4. Fund manager, especially one focused on ETF's such as Pathfinder
5. Setting up a separate online account via E-trade or optionsexpress - I don't know too much about this but have seen it mentioned quite a few times on ST.

As mentioned, I am a fairly new investor so the above information may be incorrect, misguided or incomplete, so I apologise for this and would appreciate if there are any corrections to be made.

Hopefully with your guidance I can make a final decision about the best way for me to gain access to overseas shares.
Thanks all!

heisenberg
15-10-2013, 01:02 PM
For the NZX/ASX I feel that I can manage as DIY. I would like to manage global shares in this manner, but if this is going to be difficult, costly, or advised against by you all, then I will consider a managed fund.

peat
15-10-2013, 01:06 PM
I guess the main thing is with the amount of funds you have indicated are available then a managed fund or ETF is the only option that will allow you to obtain a sensible amount of diversification especially in the o'seas markets.

heisenberg
15-10-2013, 01:44 PM
Thanks peat- any advice on the best way to purchase these ETFs? Through asb securities or the ASX for example?

CJ
15-10-2013, 02:15 PM
Thanks peat- any advice on the best way to purchase these ETFs? Through asb securities or the ASX for example?For international ones you will have to buy on the ASX. look at the iShares range for low cost index funds. They should be a good start to you get a big enough amount to invest directly.

blackcap
15-10-2013, 06:08 PM
For international ones you will have to buy on the ASX. look at the iShares range for low cost index funds. They should be a good start to you get a big enough amount to invest directly.

CJ is onto it. i-shares are a cheap way to enter global markets with a plethora of different indexes and possibilities. And as far as I know the charges are very minimal as well. I did not know they were offered on the ASX but good to know. I buy them through my European broker at present. Its a pity there are not more of these listed on the NZX.
But to your initial question, if you have access to a foreign bank account and can open up a broker account overseas... that would be the way to go. They do not charge as much for global shares and the amount of markets and shares is infinite. This would be the cheapest option. But presuming you do not, then Ishares or some form of tracker on the ASX would be the way to go with the amounts you are talking about.

Kaspar
15-10-2013, 08:21 PM
For international ones you will have to buy on the ASX. look at the iShares range for low cost index funds. They should be a good start to you get a big enough amount to invest directly.

A problem I found with the global ETFs on the ASX is that it's not easy to receive the dividends. I spoke to Vanguard and they said I had to have an Australian bank account. I think iShares might still send a cheque but I'm not 100% sure on this. Even if they did that's another cost cashing a foreign cheque, and a significant one if the dividend amount is quite small.

There is also no dividend reinvestment plan for the global ETFs.

Smartshares have stated they are bringing a global ETF to the market late this year, if it's ok I'll probably join the regular savings plan for that. I'm already contributing monthly to FNZ.

Joshuatree
15-10-2013, 09:19 PM
PIE Funds NZ have a new global fund out which ive bought into ( I have two of their other funds as well). Brilliant track record so far.

blackcap
16-10-2013, 08:30 AM
A problem I found with the global ETFs on the ASX is that it's not easy to receive the dividends. I spoke to Vanguard and they said I had to have an Australian bank account. I think iShares might still send a cheque but I'm not 100% sure on this. Even if they did that's another cost cashing a foreign cheque, and a significant one if the dividend amount is quite small.

.

Kaspar, I have an Online Cash Management Account (OCMA) with Direct Broking. I get many dividend cheques from Australian companies some of them pretty small. I then send these cheques to Direct Broking who put them into my OCMA at no cost and 3 days later the funds are cleared. These are then to be used to buy more shares or for whatever you want. I used to have to take these cheques to the bank at considerable cost but no more.

heisenberg
16-10-2013, 09:44 AM
Hmm, I wonder if ASB securities offers a similar service- will have to look into it. A lot of good replies here, thanks
Added: ASB does have a foreign currency account-
"Minimal fees - There are no transaction fees associated with the ASB Foreign Currency account for transfers being made between an ASB Cash Management account and an ASB Foreign Currency account. However, if you withdraw funds from your ASB Foreign Currency account in the form of a telegraphic transfer, travellers cheques or foreign cash, fees will apply."

I wouldn't plan to withdraw any funds from this foreign account, just to reinvest whatever is earned. Could be an option.