[Emmet]

Was talking to a friend recently who lives in Australia..does he have exposure to Vanguard and/or Fidelity options..

I understand he can’t access American retirement accounts but can he purchase VTSAX or FXAIX for example?

[Becca]

I have shares of the nzd hedged version of the Vanguard International Shares Select Exclusions Index Fund.

It’s a total world fund excluding ASX, tobacco and weapons.

If they are a US citizen and file US taxes, they should do some research before owning PFICs.

[Jasmine]

Is this friend a US citizen? Or satisfy the IRS definition of a US taxpayer? Note that a US citizen living in Australia would still be considered a US taxpayer.

If he is a US taxpayer, he needs to be *extremely* careful buying index funds outside the US due to IRS PFIC rules.

It can cause a tax nightmare for US tax returns.

[Lee]

Vanguard has an Australian arm.
There’s also CommSec, which is one of the major brokerages in Australia, and much more well-known in Australia than

There are Australian index funds, like ASX200, which I think is like S&P500, but Australian companies, and only ~200 companies rather than ~500 as Australia is a smaller market.

The closest Australian equivalent to a 401k is called Superannuation.

This is a tax-advantaged employer-sponsored retirement account that most Australian employees have.

[RP]

Here is JL Collins’ advice for non-US investors:
Christine Benz of Morningstar: I wanted to ask about geographic exposure.

You mentioned that the U.S. market is a market where one could reasonably put all of their equity exposure into it and be well diversified.

How about people who are living in smaller markets?

How would you suggest that they approach their geographic exposure for the equity component of their portfolios?

JL Collins’ response: I think for those people, assuming that they have access to it, what they want is a world fund. And you have to be a little careful here.

It’s not an international fund and those tend to be funds that exclude the U.S.

But if you buy a world fund, you’re basically buying every market in the world, including the U.S., and you certainly want to have that in your portfolio.

So, if that were available to those folks, that would be my recommendation.

And in fact, when I’ve given talks overseas and we start talking about specifics, that’s exactly what I recommend to those people.

They could, I suppose, if they had access to it, invest in VTSAX as an example, which is Vanguard’s Total US Stock Market Fund.

But I don’t know, I think if I were living in Germany or the Netherlands or what have you, I don’t know how comfortable I’d be putting all my money in some other country.

I know that’s probably not entirely logical, because it is the same investment that I’m in.

But I think for those people, if I were in those countries, I’d go to a world fund.

[Frank]

He can open an account at Interactive Brokers Australia and buy all kinds of ETFs and similar worldwide.

He should NOT by US mutual funds and does not need to.

There is nothing “magical” about them and there are many similar options.

[Author]

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