Global equities sector: highest number of new entrants since before GFC.
A report by investment research house Lonsec Research (Lonsec) has revealed that over the past 12 months the global equities sector has seen the highest number of new entrants since before the onset of the Global Financial Crisis.
Lonsec’s Global Equities Sector Review found that product choice in the global equities sector was experiencing strong growth and that choice has been buoyed by new entrants in the local market rather than simply an increase in available products from already established players.
Rui Fernandes, Senior Investment Analyst, Lonsec said that when you consider Australia’s investment landscape it is easy to understand why there are more managers offering more products
“Australia has a large and growing pool of assets and the recent rallies from major international bourses such as the S&P 500 and the Nikkei have attracted investors to the global equities story,” Mr Fernandes said.
“The large asset pool (A$1.8 trillion as at December 2013[1]) and mandated growth through the superannuation guarantee scheme make Australia a particularly attractive market for offshore manufacturers. Setting aside the business opportunity for global managers, there has also been a strong investment case for global equities in general due to opportunities from offshore equity markets but also given the purchasing power of the Australian dollar,” Mr Fernandes said.
While offering investors greater choice, The Lonsec Review demonstrates that the notable increase in global equities presents both opportunities and challenges for financial planners.
“The new additions create many opportunities for planners by providing investors with greater choice and increased access to different products and markets.
“However, more choice can lead to complications and there is an increased responsibility for financial planners to know which option is going to meet the need of their clients in terms of individual risk appetite and desired investment outcomes.
In response to the number of new entrants and products in the market, Lonsec has broken down its global equities sector into more granular bite sized pieces to ensure it provides planners the most comprehensive review of this growing sector
“The global equities investment landscape has evolved, and is more complex, but in saying that it now offers more interesting ideas than at any time in the past which would benefit from careful consideration—be it more nuanced portfolio use of newly available index strategies or investing into a greater breadth of unconstrained products,” Mr Fernandes said.
“The growth in options across the sector coupled with some favourable tailwinds should reward planners who take a fresh look at investments in this space.”