Why investors should look beyond the ASX 200 to US share markets

The S&P/ASX 200 Index (ASX: XJO) has plenty of great investment opportunities. But Aussie investors shouldn’t limit themselves to ASX shares. The ASX, after all, represents only a small fraction of the listed companies you can invest in.

And investing overseas is becoming easier and cheaper with each passing year. Many online trading accounts now enable users to buy and sell international shares.

There are a few additional risks to consider. Chief among them is currency fluctuations, which can increase your gains or losses when you sell your shares and convert back into Aussie dollars.

Let’s home in on the United States’ share markets.

Yesterday (overnight Aussie time) both the S&P 500 (INDEXSP: .INX) and the tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) closed at fresh record highs once again.

The S&P 500 is now up 16% over the past 12 months and up 75% from the 23 March post-COVID rout lows.

The Nasdaq is up 44% over the past 12 months and up 104% since 23 March.

The ASX 200, on the other hand, remains down 4% over the past 12 months, while it’s up 50% since 23 March.

That doesn’t mean all the shares in US indices outperformed ASX shares. Far from it. But it does bolster the case for investing some of your money outside of the ASX.

Should Aussie investors consider US shares?

To gain an expert view on the issue, I asked Adam Smith, CEO at Saxo Capital Markets Australia, why Aussie investors should consider investing some of their money into US share markets.

Here’s his reply:

By investing in the US market, you can diversify your portfolio by investing in companies or industries that are under represented on the ASX. You can also own a share of a business that you associate with, or whose products you like, such as Apple, Microsoft, or Netflix.

Australians have historically had a natural home bias when it comes to investing in shares, but that is changing rapidly as access to international share markets becomes easier and cheaper, and names like Tesla capture the imagination of the investing public.

Apple, Microsoft, Netflix and Tesla share price snapshots

Here’s a quick review of the 4 US shares that Adam mentioned.

The Apple Inc (NASDAQ: AAPL) share price is up 65% over the past 12 months.

The Microsoft Corporation (NASDAQ: MSFT) share price is up 32% over the past 12 months.

The Netflix Inc (NASDAQ: NFLX) share price is up 46% over the past 12 months.

And last, but certainly not least, the Tesla Inc (NASDAQ: TSLA) share price has gained 429% over the last 12 months. Nope, that’s not a typo.

So, how much of your portfolio is invested in the US share market?

More reading

• Nasdaq at record high! Here’s what it means for the ASX 200
• These 3 ASX shares invested in Bitcoin before Tesla (NASDAQ:TSL)
• Here’s what low interest rates really means for your cash
• Tesla invests $2b in Bitcoin. Has crypto finally arrived?
• Motley Fool CIO, Scott Phillips, talks to Sky News: Tesla’s bitcoin bandwagon, and ASX dividends back on menu

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple, Microsoft, Netflix, and Tesla. The Motley Fool Australia has recommended Apple and Netflix. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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