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How SA investors can access Wall Street

NYSE is the centre of the listed equity universe.

CAPE TOWN – The New York Stock Exchange (NYSE) is by far the largest bourse in the world. At a market capitalisation of over $19 trillion, it is bigger than the next four largest exchanges combined. 

Nearly 2 500 companies are listed on Wall Street, including many of the world’s largest corporations. It is undoubtedly the premier place to raise capital, as evidenced by Alibaba’s record-breaking $25 billion IPO in September this year.

The NYSE’s size and importance makes it, in many ways, the centre of the listed equity universe. Global investors benchmark the return of all other markets against what they can earn in New York.

For South African investors, it is also possible to get direct access to shares on Wall Street through the iShares MSCI USA ETF. The fund can be traded on the Standard Bank Webtrader Platform.

It provides highly diversified exposure to the US market through holding 631 different stocks, weighted by their market capitalisation. No single share makes up more than 3.5% of the portfolio.

Over the last 12 months the fund has returned over 16% as US stocks have continued to rally on optimism about a recovery in the world’s largest economy. While many analysts believe that the momentum in the economy is likely to continue, investors should however be wary that a lot of that confidence may already be priced in to the market. The fund is currently offering a price-to-earnings ratio of close to 19 times.

The largest sector exposure in the ETF is to information technology, at 19.77% of the portfolio. That includes giants like Apple, weighted at 3.48%, and Microsoft at 1.92%.

Financials make up 16.37% of the fund, with the largest single holding in this sector being Wells Fargo with a weighting of 1.41%. JPMorgan Chase sits at 1.19%.

Other notable counters that sit in the fund’s top ten holdings include Exxon Mobil, Johnson & Johnson, General Electric, Proctor & Gamble, Chevron and Pfizer.

The fund offers a dividend yield of 1.94%.

*This is a sponsored education series focused on offshore investing. The content is sponsored by Standard Bank Webtrader and Moneyweb are the content creator.

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