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How to get exposure to the US economy

Sebastian Bowen
NYSE building with American flag and Wall Street sign

It’s no secret that the United States of America is home to the most popular and the most liquid stock exchanges in the world – which house some of the most popular and successful companies on the planet. Housed in the New York Stock Exchange and the NASDAQ are companies like Facebook, Apple, Microsoft, Ford and Amazon that, quite frankly, put the ASX to shame in terms of global domination.

Now, I have nothing against the ASX – I love our top-notch companies like CSL Limited (ASX: CSL) that have been (and will continue to be) great places to invest in. But the US can offer some opportunities that simply aren’t available to us down under.

How to invest in America

If you want a slice of the largest economy in the world, it can be a bit tricky.

Brokering services offered by the likes of Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB) do give you the opportunity to buy US shares directly. However, it can be quite costly and there’s also Foreign Exchange fees and US tax forms to worry about.

An easier (in my view) option would be to go with exchange traded funds (ETFs). The iShares S&P 500 ETF (ASX: IVV) tracks the largest 500 companies in America – giving you access to the biggest US movers and shakers in one easy share.

If you wanted an ETF that takes currency fluctuations out of the equation, there’s also the iShares S&P 500 (AUD Hedged) ETF (ASX: IHVV).

The Vanguard U.S. Total Market Shares Index ETF (ASX: VTS) takes this one step further by tracking the entire US public market. That’s 3,600 US companies under one fund – representing a comprehensive investment in the US economy.

Of course, ETFs are broadly focused, so you get the good as well as the bad and the ugly – which ends up getting you an ‘average’ return over time.

If you’d prefer investments that actively seek to find only the best US stocks out there, I would take a look at something like MFF Capital Investments Ltd (ASX: MFF). MFF is a Listed Investment Company with concentrated positions in US shares like Mastercard, Visa, Coca-Cola and Alphabet (Google).

Other popular options are the funds offered by Magellan Financial Group Ltd (ASX: MFG) such as the Magellan Global Trust (ASX: MGG). This trust has a slightly wider portfolio of US stocks that currently include Apple, Starbucks, Microsoft, Facebook, Yum! Brands as well as Visa and Mastercard as well.

Foolish Takeaway

When it comes to investing in the economy of the United States, there are a few easy options available on the ASX which you can pursue – in addition to going out on your own and buying individual US shares through your broker. Whether it’s shares, hedged ETFs, LICs or Trusts – I think there’s something for everyone who wants a slice of the American pie!

The post How to get exposure to the US economy appeared first on Motley Fool Australia.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Sebastian Bowen owns shares of Facebook, Magellan Flagship Fund Ltd, and National Australia Bank Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of National Australia Bank Limited. The Motley Fool Australia has recommended Facebook. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020