Aussie investors to head overseas
The majority (68%) of Australia’s leading1 investors believe global markets will rise over the next year. A greater number of these investors also plan to increase their investments in overseas assets than those intending to decrease, shows Australia’s global investing intentions index. Meanwhile investors are cooling in their outlooks for the domestic stock market.
These are some of the key findings of a landmark study to investigate the “smart money” intentions of Australian investors investing in overseas assets.
The inaugural Certitude Global Investing Intentions Index (CGIII) produced by Investment Trends, has found that among leading Australian investors, more are planning to increase their overseas assets than decrease. This is in line with investors’ bullish expectations for global markets – 68% expect global markets to rise, versus just 19% who anticipate a decline.
The CGIII surveyed nearly 800 leading investors (High Net Worth individuals, Self-Managed Super Funds and higher income investors).
The Index itself (157 among high net worth and SMSF investors) is a number that reflects the number of Australian investors intending to increase global assets versus decreasing their exposure to global assets. This number will be tracked over time to show monthly changes in global investment intentions among Australia’s leading private investors.
The research also found Australian investors are looking to increase the international allocation in their portfolios by 70%. Despite market and exchange rate volatility, 39% of Australian investors believe they need more international assets in their portfolios than they currently hold.
Craig Mowll, CEO of Certitude Global Investments said:
“This research confirms a shift among leading Australian investors who demand greater international exposure in their portfolios. Local investors now know there are limitations to their current allocation to assets, particularly the strong bias to domestic assets, and they are beginning to appreciate there is 98% of the universe that presents very good opportunities.
“Many institutions actively topped up their overseas allocations some time ago either through locally based managers or by dealing directly with offshore funds or investing directly in offshore assets. The leading investor is now following that lead.
“While it’s more difficult for HNW individuals and SMSFs to access these markets and assets, we’re now at a point where 39% of investors are saying they need more international assets in their portfolio and more than half of those investors are (52%) planning to make overseas investments in the next six months.”
Key Findings:
- 68% of Australian investors think global markets will rise over the next year, compared to only 19% expecting a decline
- Australian investors would like to have 70% more overseas assets in their portfolios than they think they hold currently
- 39% of Australian investors overall believe they need more international exposure
- Among those interested in investing overseas, 52% of investors plan to do so in the next six months, with half of those (27%) over the next three months
- Market (32%) and exchange rate (27%) volatility are the key concerns for investing overseas, followed by lack of knowledge (21%)
Volatility, information remain barriers
Mowll recognised that market and exchange rate volatility are concerning to Australian investors searching for global investing opportunities.
“That volatility is a worry for local investors is not a surprise,” said Mowll. “However, our research also indicates that many Australian investors do not feel sufficiently well-informed to make offshore investment decisions, with 21% citing a lack of knowledge as a barrier to overseas investing.
“Global investment opportunities need to be fully understood before investing. Volatility is outside investors’ control but having the right information is easier to achieve with the right partner.
“Our due diligence aims to do the leg work and research so investors and advisers don’t have to. The CGIII, for example, provides investors with a source of information on intentions from peers.”
Offshore equities, Asia on investors’ shopping list, and soon
The CGIII also highlighted that investors are mostly interested in offshore equities with nearly three quarters of those looking offshore listing equities as the asset class they were most likely to invest in over the next twelve months. Equities were more than three times more likely to be a focus for investors than property.
Markets of most interest include the US/North America with 50% of investors listing it as the top market, and citing Asia as a second target (28%). While commentary has recently focused on interest in Japan, only six per cent of investors listed it as a market to invest in directly over the next twelve months but instead prefer a more diversified access to Asia which would include Japan.
“We believe the intentions of leading investors and advisers can also be taken as a leading indicator for where and when other Australians will move to specific markets and asset classes around the globe.
“This research reflects an increase in interest in US/North America, Asia and a desire for a broader global exposure covering multiple regions.
“These responses reflect patterns seen by our partners in the US, UK and Asia as they see Australian capital making inroads in those markets,” concluded Mowll.
1 The CGIII surveyed actively engaged investors who have discretionary funds for investing, including High Net Worth individuals, Self-Managed Super Funds and higher income investors.
