Key takeaways:

• The US automotive, aerospace and defence, and mega-tech sectors provide opportunities for investors that are not available on the ASX

It no secret that the US is home to the largest stock market in the world, dwarfing global markets, and in particular, the ASX. That goes some way towards explaining why US indexes like the Dow Jones, S&P 500, and the Nasdaq are viewed as a barometer for global investor sentiment.

As the pinnacle for public listings, the US share market attracts companies from all corners of the world, and from all types of industries. Given its size, scale, and reputation, US markets play host to thousands of stocks. 

What is interesting is that a number of these investment opportunities hail from industries or segments that are, for the most part, unavailable to Australian investors on the ASX. Let take a look at some of these opportunities, which might remind us about the benefits of investing in US shares.

Auto Manufacturers (Electric Vehicles)

With a growing number of countries around the world set to phase out petrol and diesel cars over the coming years, the automotive industry will play a pivotal role in efforts to cut emissions and reach global net-zero targets.

In 2022 every three in 20 cars sold worldwide were electric vehicles, with more than half of that amount sold in China. Such is the uptake of electric vehicles, sales within the category have tripled over the last three years to 10 million units.With government policies and emissions standards set to underpin EV growth, market revenue is forecast to grow by an annual growth rate of 10.1% over the next five years to reach more than US$900 billion by 2028.Of course, Tesla (NASDAQ: TSLA) has become synonymous with electric vehicles, and there are challenger brands like Rivian (NASDAQ: RIVN) and Nio (NYSE: NIO) in the mix. However, the US stock market is also home to some of the world most well-known car companies, including but not limited to Toyota Motor (NYSE: TM), General Motors (NYSE: GM), Ford (NYSE: F), Stellantis (NYSE: STLA), and even Ferrari (NYSE: RACE).

Aerospace and Defence

According to the US Office of Management and Budget, the world largest economy spent US$766 billion on national defence during fiscal year 2022. That was equivalent to 12% of federal spending. Across the last decade, the average expenditure represented 15% of the federal budget. This level of spending highlights the fact that the United States spends more on defence, relative to the size of its economy, than any other member of the Group of Seven (G7). In some cases, spending is nearly three times that of other advanced economies. Overall defence spending accounted for nearly 40% of global military expenditure last year, and more than the next ten countries combined.

The defence segment covers things like weapons, arms, and equipment used for military purposes. Meanwhile, aerospace spans the design and manufacture of aircraft, spacecraft, missiles, and rockets. 

While the ASX features a handful of small aerospace and defence names, the US is awash with large-cap global players in this sector. This includes Lockheed Martin (NYSE: LMT), Northrop Grumman (NYSE: NOC), Raytheon Technologies (NASDAQ: RTX), and Honeywell International (NASDAQ: HON). Commercial aircraft manufacturers like Boeing (NYSE: BA) are also listed on the NYSE.

Mega-Tech

Technology is a central part of all our lives, and in the case of businesses, digitisation has brought about unparalleled change. In some respects, the coronavirus accelerated the shift towards a tech-centric global economy, and it only follows that the world largest companies are tech businesses.

The tech sector represents a weighting of just 2.3% of the ASX 200, with only 11 companies currently trading with a market cap of more than $1 billion. By contrast, the Nasdaq index primarily includes tech companies, and a significant portion of the index market cap is influenced by global titans such as Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOGL), Amazon (NASDAQ: AMZN), Nvidia (NASDAQ: NVDA), and Meta Platforms (NASDAQ: META), among others.

US tech exposure covers themes such as e-commerce, consumer electronics, social media, hardware, software, cloud-computing, semiconductors, artificial intelligence, and much more. Regardless of the sub-category, there is no ASX-listed tech stock that comes close to the size, reach, and familiarity of the mega-tech names on the Nasdaq, which trade at a collective value in the trillions of dollars.

Ultimately, the US stock market offers Australian investors the chance to access niche industries or a broader selection of stocks from niche industries than they otherwise would have access to. This is another means with which investors can diversify their portfolios and gain exposure to some of the most popular investing themes across global financial markets.