The Royal Bank of Scotland (RBS) and CommSec have announced the launch of a new product that gives investors exposure to individual United States equities such as Apple and Berkshire Hathaway.
Known as exchange-traded international securities (ETIS), the product is denominated in Australian dollars and will be listed on the Australian Securities Exchange (ASX).
"The US sharemarket has exposure to some sectors which are difficult to gain exposure through Australian companies listed on the ASX, such as the tech sector and pharmaceutical sector," RBS head of public distribution Aaron Stambulich said.
"With the launch of ETIS, retail investors who want to buy US shares can now avoid the difficulty of setting up and maintaining an international account and incurring associated administrative costs," he said.
Stambulich said ETIS would provide Australian retail investors an opportunity to tap into the growth potential of the recovery in the US market through an easily accessible, cost-efficient service for purchase with Australian currency during local trading hours.
The first series of ETIS to be issued are linked to the top 35 US stocks including Google, Microsoft, Citigroup, AT&T, Coca-Cola, Kraft, Exxon Mobil, Wal-Mart, Pfizer, Apple and Berkshire Hathaway, he said.
However, the products carried risks including foreign currency exposure, liquidity risk and counterparty risk.
"Investors are taking counterparty risk on RBS as the value of the ETIS depends on the ability of RBS to perform its obligations under the terms," Stambulich said.
RBS will also charge a 50 per cent fee on the dividends paid out by the companies.
This would help cover the costs to RBS as an issuer, such as ASX listing fees, share registry costs, processing costs and hedging dividend costs. Some companies such as Google and Apple pay no dividends.
The ETIS initial offer is open until 29 April through CommSec. Investors can purchase ETIS directly via the ASX in the secondary market after listing. Stambulich said RBS would look to expand its offering of ETIS.
