Although some will argue that money never comes easily, investing in some of the big-name US stocks of late has been as close as you could get to making “easy money”. Take Facebook, for instance. In just two years it has risen 90%; similarly, online retailer Amazon has soared 157%.
These stocks were not difficult to track down either. They weren’t the exclusive province of professional or institutional investors. Quite the contrary. A third of the planet uses these companies’ products. So why didn’t we all invest in them?
One reason is access. To date, access to buying shares in international companies has been largely prohibitive for Australian investors – commissions, FX fees, and the difficulty of finding research on international stocks has kept most investors out of the game. Until recently, that is.
IG Markets’ chief market strategist, Chris Weston, says that the big US tech names were repeatedly on clients’ wish lists, and for this reason, IG Markets launched direct foreign share trading in 2016. It was the global brand names that “clients already had an intimate knowledge of, such as Apple or Facebook”, says Weston. “When we looked at what local brokers were charging to access international markets and the disjointed way in which they were traded on separate accounts and platforms, we identified an opportunity for IG to deliver a low cost, singular platform solution for trading Australian and international shares.”
In November last year, Canstar reviewed IG Markets’ Share Trading platform and awarded it a 5-Star rating, the top award for international shares. It was awarded 5 Stars for “outstanding value on the back of a strong price and features combination.” IG had managed to offer a service that made international share trading not only affordable for the everyday investor, but also simple to administer. For starters, rather than having multiple accounts with logins to different platforms, IG gives clients just one account and one login that works across all platforms – desktop, tablet, and mobile. Clients are then given access to a research portal, as well as free advanced charting software with technical indicators and personalised alerts. Investors can build indicators and run back-testing of trade strategies. And client assets are held with Citigroup, which is one of the largest custodial banks in the world.
Oliver Imre, Director of IG Australia, said “Anyone trading international shares need to be aware of the FX conversion fees their broker is charging them. People don’t realise the real cost of international shares is hidden in the foreign exchange fees. If you can’t find out easily what FX fees are being charged by your broker, ask them and then decide if the fee is right for you.”
Weston admits that its clients are “engaged in global trends with a strong desire to participate.” Of all markets, “without a doubt,” he says, “our offering of US shares has been where the bulk of client activity has centred. IG also offers the ability for clients to take part in the pre- and post-market sessions, which is when many of the big multi-national companies report earnings. So they have heightened control, not just to take a position real-time, but to close out of exposures and manage portfolio risk far more dynamically than perhaps they may have been used to before.”
As the world becomes more interlinked, owning shares in companies offshore is hardly as exotic or ‘foreign’ as days gone by. And with new platforms allowing access to international share trading as easily and simply as investing locally, it certainly does seem worth investigating.
‘On the whole, the demand for international shares has exceeded expectations,’ says Weston. ‘It is a reflection that our offering allows Australian clients the ability to diversify and participate in the strong performance of international shares, including US tech names.’