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Next TraCR series tackles SMSF diversification

New TraCRs series allows SMSF access to US equities.

Stock exchange Chi-X Australia and Deutsche Bank have launched the next series of transferable custody receipts, or TraCRs, to access United States equities in a bid to ease the process of investing internationally for SMSFs.

The TraCRs relate to shares in US blue-chip companies including Microsoft, Facebook, Disney, JP Morgan and Exxon Mobil, among others, and come on the back of the launch last month of TraCRs relating to Apple shares.

Chi-X chief executive Vic Jokovic said: “TraCRs will trade locally on the Chi-X exchange, which removes the foreign brokerage fees, and may help to lower the FX and US custody fees, which are currently charged to Australian investors when they invest directly in US equities.

“We are confident that the arrival of TraCRs in the Australian market will unlock significant value for Australians, greatly reducing friction and removing some of the barriers to entry for those looking to access US equities.”

Jokovic told a media briefing in Sydney today that Chi-X and Deutsche worked with SMSF organisations, particularly CommSec, which controls a large pool of SMSF money, on the issue of lack of diversification in SMSF portfolios.

Deutsche Bank Australia and New Zealand head of depositary Chris Bagley added SMSFs invest less than 1 per cent in direct international equities due to the laborious nature of setting up accounts, including paperwork, and the process of lodging Australian dollars to get remitted into US dollars.

Jokovic said while there is only a 1 per cent direct ownership of international equities, he has noted a migration over the past few years into international products, including investments in exchange-traded products.

“What we’re offering is something very different which is an efficient way to invest directly and in Aussie market hours, in Australian dollars, in Australian dividends through your broker,” he said.

“So an Australian shareholder can go and call his broker this morning and place an order in Apple and have that order executed today.”

Each TraCR gives its holder a beneficial interest in an underlying share that is traded on the New York Stock Exchange or NASDAQ. For instance, one Apple TraCR provides its holder with a beneficial interest in one Apple share.

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