Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 179

Location, location, location! Is your ETF Australian domiciled?

Exchange traded funds (ETFs) that provide access to international markets, sectors and specific thematics continue to grow rapidly on the ASX, with now approximately 70 ETFs providing international equity exposures. International ETFs provide Australian investors with a simple and cost effective way to access growth opportunities, including under-represented (or even absent) sectors from the S&P/ASX200. However, as with any investment, it’s important to look at how the fund is structured. An often overlooked issue is the location or domicile of the fund, where the devil, of course, is in the detail.

Australian domiciled funds vs. CHESS Depository Interests (CDIs)

ETFs that invest in international (i.e. non-Australian) assets will generally come in one of two forms, largely indistinguishable on the surface but with quite different structures.

An Australian domiciled ETF is one that is formed, registered and regulated in Australia, is resident in Australia for tax purposes, and whose ‘home’ exchange is the ASX.

The alternative structure for international ETFs trading on the ASX is through a CHESS Depository Interest (CDI) in an already established offshore fund. In the case of ASX traded ETFs, all CDIs currently available are for funds based in the US. A CDI is a financial product quoted on the ASX which confers a beneficial interest in the underlying financial product to which it relates. A CDI will generally be listed by a global fund manager with an Australian presence and, though quoted on the ASX, it is actually a ‘cross-listing’ of the US fund.

Buying an interest in a fund that is domiciled in the US, for example, and cross-listed in Australia, presents certain considerations for investors:

  • Foreign governance: Offshore funds are governed primarily by the laws of the country of their original listing, not Australian law.
  • Additional administration: Because each CDI is an interest in the offshore fund, CDI holders are required to submit a W8-BEN form to the fund if they wish to reduce their withholdings tax (e.g. from 30% to 15% under the Australia-US double tax treaty). This is not a one-off and requires periodic updating.
  • Legal implications: Being governed primarily by foreign law, investors in offshore funds may have to contend with legislation that does not exist in Australia, such as potential US Estate Taxes for US domiciled investments.
  • Extra layer of withholdings tax – generally, an Australian resident holding a CDI on a US listed global exposure is subject to potential withholdings tax twice, ie from the foreign companies into the US and then into Australia.

By contrast, an investor in an Australian domiciled fund does not need to fill out individual W8-BEN forms because they are filled out once at the fund level, by the fund manager. Also, being governed primarily by Australian law, there are minimal, if any, direct foreign law impacts for investors. The investor is only subject to withholdings tax once on a global exposure – on the distributions from the foreign companies into Australia.

Australian domiciled or CDI? It’s worth ‘looking under the bonnet’ before you invest.

 

Adam O'Connor is Manager of Distribution at BetaShares. BetaShares is a sponsor of Cuffelinks and all their international funds are Australian-domiciled. This article does not consider the personal circumstances of any investor.

 

RELATED ARTICLES

The challenges of building a lazy portfolio

Global ETFs: insights into a multi-trillion-dollar industry

Australian ETFs: end of year reviews 2018

banner

Most viewed in recent weeks

16 ASX stocks to buy and hold forever, updated

This time last year, I highlighted 16 ASX stocks that investors could own indefinitely. One year on, I look at whether there should be any changes to the list of stocks as well as which companies are worth buying now. 

UniSuper’s boss flags a potential correction ahead

The CIO of Australia’s fourth largest super fund by assets, John Pearce, suggests the odds favour a flat year for markets, with the possibility of a correction of 10% or more. However, he’ll use any dip as a buying opportunity.

2025-26 super thresholds – key changes and implications

The ABS recently released figures which are used to determine key superannuation rates and thresholds that will apply from 1 July 2025. This outlines the rates and thresholds that are changing and those that aren’t.  

Is Gen X ready for retirement?

With the arrival of the new year, the first members of ‘Generation X’ turned 60, marking the start of the MTV generation’s collective journey towards retirement. Are Gen Xers and our retirement system ready for the transition?

Why the $5.4 trillion wealth transfer is a generational tragedy

The intergenerational wealth transfer, largely driven by a housing boom, exacerbates economic inequality, stifles productivity, and impedes social mobility. Solutions lie in addressing the housing problem, not taxing wealth.

What Warren Buffett isn’t saying speaks volumes

Warren Buffett's annual shareholder letter has been fixture for avid investors for decades. In his latest letter, Buffett is reticent on many key topics, but his actions rather than words are sending clear signals to investors.

Latest Updates

Investing

Designing a life, with money to spare

Are you living your life by default or by design? It strikes me that many people are doing the former and living according to others’ expectations of them, leading to poor choices including with their finances.

Investment strategies

A closer look at defensive assets for turbulent times

After the recent market slump, it's a good time to brush up on the defensive asset classes – what they are, why hold them, and how they can both deliver on your goals and increase the reliability of your desired outcomes.

Financial planning

Are lifetime income streams the answer or just the easy way out?

Lately, there's been a push by Government for lifetime income streams as a solution to retirement income challenges. We run the numbers on these products to see whether they deliver on what they promise.

Shares

Is it time to buy the Big Four banks?

The stellar run of the major ASX banks last year left many investors scratching their heads. After a recent share price pullback, has value emerged in these banks, or is it best to steer clear of them?

Investment strategies

The useful role that subordinated debt can play in your portfolio

If you’re struggling to replace the hybrid exposure in your portfolio, you’re not alone. Subordinated debt is an option, and here is a guide on what it is and how it can fit into your investment mix.

Shares

Europe is back and small caps there offer significant opportunities

Trump’s moves on tariffs, defence, and Ukraine, have awoken European Governments after a decade of lethargy. European small cap manager, Alantra Asset Management, says it could herald a new era for the continent.

Shares

Lessons from the rise and fall of founder-led companies

Founder-led companies often attract investors due to leaders' personal stakes and long-term vision. But founder presence alone does not guarantee success, and the challenge is to identify which ones will succeed in the long term.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.