International equity fund manager, Insync Funds Management, believes that now is the time to buy global stocks.

“Over the last ten years large cap global shares have gone from being wildly overpriced to reasonable value. This is seen by the S&P 500 moving from a PE (Price to Earnings ratio) of 35 times to a current PE of 14 times.

“As a result, the S&P has delivered a meager return of 1.3% p.a. Combined with this has been the re-rating of the Australian dollar which has doubled from around $US0.50 to its current parity level with the USD,” said Bob Desmond, Senior Portfolio Manager, Insync Funds Management.

This has brought a dramatic increase in the buying power of Australian investors who invest abroad. Consider the following example of an investor who bought Microsoft ten years ago:

“This shows for each dollar invested in the company, an Australian investor is getting 10 times more ‘bang for his buck.’ Investors as a group are always backward looking and always want to buy ‘what has gone up’,” said Mr Desmond.

In 2000, investors were selling resources and emerging markets to buy technology and US large cap stocks. Ten years later, they are doing the exact opposite.

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