Making foreign investments in assets abroad can be a great option to diversify a portfolio and to find more profitable alternatives. Before doing this type of transaction, however, it is necessary to have some basics about how to invest abroad.
Therefore, in this article, we will talk about how to invest abroad, and also about the advantages of owning part of the investments outside Brazil. Thus, it will be possible to better understand why so many investors are looking to diversify their investments abroad.
How to invest abroad?
The best way to invest abroad is, without a doubt, opening an account with an American stockbroker or in some foreign companies. This is because, unlike Brazil, the American stock exchanges have companies from all over the world being traded.
Therefore, it is possible to buy shares of companies from Europe, Asia, Oceania, in short, companies from all over the world directly from the largest stock exchanges in the world, the American stock exchanges NASDAQ and NYSE.
And in addition to company shares, there is also the possibility of acquiring ETFs (Exchange Traded Funds) from different countries. In this sense, it is possible to buy an ETF from companies in Turkey or India directly from the USA.
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1. Investment Funds Abroad
Investing in Investment Funds Abroad, that is, in funds that have assets from outside the country in their portfolio is also another way of investing in assets outside the country, direct investment. This alternative avoids obligations with the Central Bank or the Income Tax.
In fact, these obligations still exist, but the fund manager is responsible for bureaucracy and portfolio management. This process provides more convenience and lower cost — since investors, in turn, only buy shares in this fund.
It is worth noting that all investment in funds with investment abroad is legal, due to the fact that funds abroad are required, by the Brazilian Securities Commission, to include the observation “investment abroad” in each asset title. However, due to the charges, it is necessary to be careful when evaluating the invested funds.
2. ETFs (Exchange Traded Funds)
Exchange Traded Funds (ETFs) are exchange-traded products that combine a set of shares in the same asset. With it, it is possible to buy fund shares as if they were shares.
In this case, the investor buys ETF shares, which are passively managed by a management company, which follows an investment methodology. In other words, ETFs are passively managed, following the portfolio distribution of a respective index.
3. BDRs (Brazilian Depositary Receipts)
Finally, another way to make an international investment is through BDRs. These assets are like shares of American companies but traded on the Brazilian stock exchange, B3.
And unlike the shares of companies traded in the United States, the BDRs traded on the Brazilian stock exchange are quoted in reais. So, the variation in the price of these assets depends on the company’s price fluctuation on the US stock exchange and also on the dollar exchange rate.
It is worth noting that this investment is a good alternative for a direct investor who wishes to invest directly in shares of specific American companies, contrary to what happens with Investment Funds and ETFs.
Finally, some of the American companies that have BDRs traded on B3 are:
- Apple (AAPL34);
- Google (GOGL34);
- Microsoft (MSFT34);
- Facebook (FBOK34);
- Amazon (AMZO34);
- Berkshire Hathaway (BERK34).
Despite being an excellent investment alternative abroad, BDRs can only be acquired by qualified investors. That is investors with assets above 1 million.
Translated and adapted by Billpay