Most Brits have at least one relation in Australia, South Africa or Canada who loves to spout on about how much better life is in the colonies.
And as Auntie Brenda bungs another shrimp onto the barbie while we struggle through rain, cold and misery – and that’s just June – it’s easy to believe them.
Well, it’s easy to believe the Aussies and the South Africans. I’m not sure what the advantage of Canada is… Trees?
Anyway, perhaps you’ve thought of backing the good life with your investing cash, even if you don’t fancy relocating?
Australia has better demographics than the UK, after all, and like Canada and South Africa it also has a lot of those resources the man on the Beijing Omnibus can’t get enough of.
The good news is investing in these countries from the comfort of our over-priced rabbit hutches in the UK just got much easier.
It’s cost effective, too!
Australian, Canadian and South Africa ETFs from iShares
All this international joy is emanating from iShares, which is probably the best ETF provider in the UK.
It has launched three single country ETFs tracking Australia, Canada and South Africa, and they look pretty good value by UK standards; the South African ETF is slightly more expensive on an annual basis, but you’d expect that as the market is shallower and riskier.
The other thing to note is they are all accumulating funds, which means dividends are rolled up within the ETF.
iShares are doing this with more and more ETFs (in fact they recently launched accumulating versions of some of their big existing ETFs), and they say:
All 3 funds are accumulating funds that automatically re-invest dividends directly into the fund, which means you can easily manage operational complexities of receiving and then re-investing dividend payouts.
More like you don’t get a choice – a shame, as these ETFs are likely to be fairly high yielding.
There will be tax consequences, too, which you can read about on the iShares site.
Aside from that it’s hard to say much more about the ETFs, as their holdings haven’t been declared on the iShares site yet and I can’t seem to find the relevant indices on the MSCI website.
But here’s the ETF names and their tickers and charges:
iShares MSCI Australia
Epic code: SAUS
Expense ratio: 0.59%
Link to SAUS details
iShares MSCI Canada
Epic code: SCAN
Expense ratio: 0.59%
Link to SCAN details
iShares MSCI South Africa
Epic code: SRSA
Expense ratio: 0.74
Link to SRSA details
Investing overseas and currency risk
Things are made slightly more complicated by the fact that the base currency for the Australian ETF is UK pounds, but for the ETFs for Canada and South Africa it’s US dollars.
Still, if you plan to retire in Australia, for example, it might be worth thinking about steadily buying up a holding of the Australian ETF, as you’d then have some exposure to the Australian dollar, should it shoot upwards.
You could also use the ETFs to bet on the out-performance of their markets, or to play the commodity story.
For most of us though it makes more sense to invest overseas via regional or even global funds, rather than pick single countries, which is riskier.