buying etfs on ASX or US stock exchange

[haile]

Hi guys, I am interested in buying foreign etfs specifically for the US and emerging markets for my portfolio. My question is whether I should buy these on the ASX or directly on the US market.

The pros of buying on ASX as I see it is that there will be no custodian fees but the cons will be having a double currency risk given that the etfs are based on USD. If I buy on the US market, directbroking charges a $60/yr holding charge as well as a 0.25% annual fee which is quite a bit of money.

Any help would be appreciated!

[haile]

Thanks for the reply, ishares have listings on both ASX and the US market. Do you have any recommendations on where I should buy them? ie via the ASX or direct on the US market?

Regards

[haile]

yeah I understand what you are saying. The problem with the ASX listing is that there will be a double currency risk given that the ishares are priced in AUD but are actually non hedged to USD so the returns would be affected by the movement of both currencies.

[CJ]

yeah I understand what you are saying. The problem with the ASX listing is that there will be a double currency risk given that the ishares are priced in AUD but are actually non hedged to USD so the returns would be affected by the movement of both currencies.Forgive my ignorance but if you are exposed to NZD:AUD risk and AUD:USD risk, does that effectively net out to NZD:USD risk?

[CJ]

Stand to be corrected but I believe haile is correct, holding an ASX listed ETF is a double exposure to currency. E.g. for arguments sake say you are holding IXJ.ASX and the USD NZD is unchanged over a period of time but the NZD appreciates relative to the OZ then (all else equal) you would lose a bit of value of your holding if you decided to sell and convert back to NZD. Hence there is exposure to the AUD as well. (same would go if you held the NZD and AUD constant and the NZD appreciated vs the USD)but but but....

Assuming the underlying investment value doesn't change, and the fact that the fund is unhedged, any movement in the NZD:AUD and/or the AUD:USD should equally be reflected in the NZD:USD or else there would be an arbitrage opportunity. If there was an arbitrage, the likes of Soros would soon eliminate it.

[haile]

Yes CJ, that does make sense now that you put it that way. :) Buy it on the ASX it is!

[CJ]

Yes CJ, that does make sense now that you put it that way. :) Buy it on the ASX it is!Tries to find his financial advisor disclosure but remembers that he is just a stop/go roadworks sign operator.

Are the management fees the same for ASX and US iShares?

[CJ]

Did you know those guys earn $150,000 a year here in Australia. Bloody joke.I didn't but I did have to do a 3 day course to be qualified. ;)