The benefits of US equities can’t be ignored

Why a leading Australian financial commentator has tilted her portfolio to the US and top ETF pick for US exposure.

Australian Investment Bias

Australians tend to concentrate investments and wealth within our borders. Whether it be in the property market or domestic equities, structural benefits such as negative gearing and franking credits make local assets hard to resist.

Introducing Danielle Ecuyer

Danielle Ecuyer has over three decades of experience in equity markets, holding senior positions in institutional equities and wealth management in the UK and Australia. Since 2008, she has managed her own investments and distilled her learnings into two books...

Selling the Banks

Danielle recalls her decision to sell her bank shares as straightforward... Danielle wanted to add more growth and fewer cyclical companies and turned to the US to do so.

Why the US?

Danielle was attracted to the US markets due to the size and liquidity... Her portfolio is tilted towards secular growth companies... quality.

Innovation as a Driving Force

Danielle’s second book declares that her one-word rationale to investing in US stocks is ‘innovation’... The US has a starkly different culture around failure which fosters innovation.

Key Market Differences

Danielle notes that there are a few differences that Australians investing in the US may notice... The downside of high yielding shares is opportunity cost...

Active vs Passive US Investing

Like Aussie investments, the market contains options that appeal to all types of investors... Danielle calls out that investors can be as involved or uninvolved as they are with their domestic holdings.

Home Bias and Diversification

Home bias is the tendency to stick with what feels comfortable... It is important to acknowledge the concentration risk that we bring into our portfolios.

Beyond Local Risk

Danielle takes a more holistic approach to her wealth... The Aussie stock market is not immune to economic shocks on the other side of the world.

US vs. Australian Markets

Danielle believes that asset allocation is very personal... The US mega tech companies represent almost 40% of the Nasdaq 100 index and 25% of the S&P500 index.

ETF Pick: iShares S&P 500 ETF (IVV)

I recently wrote on the three largest ETFs in Australia... Given the breadth of coverage and the cost efficiency, iShares S&P 500 ETF IVV is a fine choice for investors seeking US-specific equity exposure.