Certitude Global Investing Intentions Index suggests local capital headed for international shares
Investors look to international assets: CGIII
Net demand for international assets reached a six month peak in January, according to the latest Certitude Global Investing Intentions Index (‘the Index’) released today. The Index, which tracks net demands for global investments, rose to 182 points in January, its highest point since inception.
The Index is one part of the Certitude Global Investing Intentions Index Report, produced each month by Investment Trends, which collates the views of over 800 actively engaged leading investors.
This month’s results indicate that global investments, particularly shares, hold a strong appeal for local investors in 2014.
One in four (25%) leading Australian investors1 plan to increase their exposure to international shares within the next month, the highest proportion seen since September 2011.
Craig Mowll, CEO of Certitude Global Investments said: “It is quite remarkable that, despite a falling Australian dollar and a predicted slowdown in Asia, local investors indicate a strong sense of optimism towards international investment prospects. It is promising to see that Australian investors are looking beyond our shores and have recognized the excellent growth opportunities that come from diversifying overseas. International shares in particular hold intense appeal to Australian investors, according to this month’s report, with one in four investors planning to increase their exposure to this asset class. Moreover, investors are planning to make these investments sooner than ever before.”
The intended timing of investors looking to allocate offshore continued to shorten to its smallest since inception. Nearly half (47%) of those intending to allocate offshore plan to do so within the next three months, up from 41% last month.
US/North America seen as land of milk and honey
The US/North America increased in popularity by 8% points in January, the upswing firmly positions this region as the number one choice for those looking to invest offshore (52% name it as their preferred region). ‘International funds covering multiple regions’ remains the second choice.
Australian investors may be attuned to recent reports of a pickup of the US economy due to a number of reasons including an increase in consumer spending, rebounding capital spending and exports. International funds covering multiple regions has been of consistent interest in the Report as it provides investors who are not comfortable with selecting a specific region access to investments offshore.
Rounding out the top five most popular regions are Asia, Western Europe and China, all of which saw rising interest from investors in January.
Mr Mowll said that regardless of the debate on China, it remains firmly on the radar of Australian investors.
“It is also interesting to note that interest in Western Europe is at its highest point since the report began. Investors evidently feel more confident in developed markets than in the past. Correspondingly concerns over sovereign debt problems in Europe have significantly decreased – where once this was the number one barrier for investors looking offshore, this month only 9% cite it as their main concern.”
Australian investors continue to lack sufficient knowledge in international investing
In line with investors’ peaked intentions to invest offshore, their concerns over market and exchange rate volatility have dropped. While market volatility has consistently been the most commonly cited barrier to investing overseas, this month it fell 6% points to its lowest point since May 2013.
Meanwhile, the most commonly cited barrier in January to investing internationally is lack of knowledge – with 23% of investors saying they ‘don’t know enough about it’.
Commenting on these findings Mr Mowll said, “The cumulative results of this month’s CGIII Report paint a very coherent picture of investors’ bullishness towards global investments, with intentions to invest overseas at a high point and market and exchange rates concerns at a low. However, we recognise that many Australian investors need to feel more informed before making the decision to invest offshore.”
January CGIII – Key Findings
- Net demand for international assets is at its highest point since inception – the Certitude Global Investing Intentions Index rose 3% to 182 in January (up from 177 in December).
- 1 in 4 investors plan to increase their exposure to international shares within the next month, up from 19% in December. This is the highest proportion seen since September 2011.
- The US/North America saw a significant bounce back as the preferred market among more than half (52%) of those planning to invest offshore, up 8% points from December. Meanwhile Asia, Western Europe and China all increased in popularity.
- The time horizon for investing offshore continued to shrink, with nearly half (47%) of investors planning to make international allocations in the next 3 months. This is the highest proportion seen since inception.
- For the first time since May 2013, market volatility is no longer the most common barrier to investing offshore. 19% of investors named this as a concern, the lowest proportion since inception. Meanwhile, ‘lack of knowledge’ became the most commonly cited barrier to international investing.