Craig Mowll

Certitude Global Investing Intentions Index predicts a festive rush for overseas assets as the proportion of investors looking to increase their international exposure within the next month is at its highest level since the Index began.

Demand from Australian active investors for overseas assets increased in November to near on record highs and these investors are more likely than in previous months to be acting within the next 30 days according to the Certitude Global Investing Intentions Index (CGIII). The CGIII found that 20% of active investors are looking to increase their exposure before Christmas. For the month prior the corresponding figure was 13% and in September just 11% planned to invest within the next 30 days.

The CGIII, which collated the views of almost 800 actively engaged investors and measured their net demand for global investments found that overall, demand for overseas investments increased slightly from last month for all active investors. Among High Net Worth (HNW) investors the CGIII revealed that demand for overseas investments increased significantly to be on par with the 4 month high.

Craig Mowll, CEO of Certitude Global Investment said: “Results this month show that investors are increasingly decisive and many are seeing Christmas as a deadline for making overseas investments as they prepare to take a break over the traditionally quiet month of January.

“Elsewhere in the CGIII we are seeing High Net Worth investors continuing the momentum of previous months, increasing their exposure in markets they think are offering good investment opportunities at the right price.”

When investors were asked to specify the international markets that they are interested in investing more in over the next 12 months, the US/North America remained the most popular choice with 48% (up 2% pts) of global investors indicating they would invest in this region. This slight increase from October reflects ongoing investor confidence amidst promising economic data, including a 10^thconsecutive month of employment growth and news that the US economy is likely strong enough to withstand an increase in interest rates for the first time since 2006.

Interestingly, the CGIII recorded a substantial increase in investor interest in Asia (18% up 7% pts), suggesting that investors are using Asia to increase their exposure to emerging markets at the expense of a broader emerging market exposure which would include; Eastern Europe and South America.

Mr Mowll commented, “Over the last month we have seen some of the Asian markets rallying on the back of the strength of U.S. data and China’s benchmark index is leading the gains amongst these markets. Hong Kong’s benchmark Hang Seng Index is another to have made good gains. We would expect that the Asian equity markets are appealing to those investors wanting measured exposure to emerging economies.”

Equities remain the preferred investment tool for gaining international exposure with 81% (steady) stating it is their preferred asset class for increasing exposure over the next 12 months. Worthy of note, however, is the increasing interest in commodities and fixed income where 9% and 8% respectively were interested in investing more over the next 12 months, up from 7% and 5% respectively last month.

This month’s CGIII also recorded a rebound in actively managed international funds as investors were asked to specify how they intended to obtain the increased exposure to these asset classes (40%, up 6% pts).

Commenting on the reasons for the rise in demand for actively managed international funds, Mr Mowll said: “This month we are seeing more investors planning to increase their exposure via actively managed funds in preference to direct shares. With a substantial increase in demand for Asia we expect that many of these investors are looking to take advantage of the knowledge of specialist fund managers rather than making their investment choices alone in a market where they may not fully understand the dynamics.”

Finally, the CGIII found that the most common concern investors have in relation to their investments is the threat of another global financial crisis. This month 53% of investors sighted this as their biggest concern compared to 49% last month. Of note is that the other concerns to have increased over the last month relate to domestic issues. The number of investors stating that their biggest concern was the state of the Australian economy increased from 36% to 41%. The proportion of investors reporting concerns about Australian debt levels increased from 24% to 25% and the corresponding figure for property prices was an increase from 19% to 25%.

Mr Mowll concluded by saying that this month’s CGIII shows that domestic issues are weighing on the minds of investors and this may be playing a part in increasing demand for overseas investment.

“At the moment we are seeing a lot of commentary around domestic issues and a possible recession, so by comparison the news from other markets appears more optimistic. With the festive season marking a traditional slowdown in investment activity it seems likely that some investors are diverting funds abroad in the short term at least as international markets, in particular Asia, appear to offer good opportunities,” he said.

It is also clear that many investors who are keen to invest offshore are aware of the benefits of managed funds, particularly those covering a region where they may not have investment expertise.”

November CGIII – Other key findings

Craig Mowll

The loss of momentum in Europe and the absence of any new potential driver to push European equity markets to new highs will see retail investors increasingly turn to Asia over the next 12 months according to Louis Vincent Gave, COO and Chief Risk officer of GaveKal Capital, on the eve of his Australian visit.

With little to keep retail investors and the marginal investment dollar in Europe, Asia looks well positioned to capitalise on Europe’s loss, particularly with the MSCI Asia index now outperforming the MSCI World for the first time since the first quarter of 2010. Adding to this woe Eurozone equities are now underperforming cash, gold, local bonds, international bonds and international equities.

Mr Gave commented, “Unfortunately for Europe, the marginal investment dollar is more often than not highly momentum-driven and chases performance. That’s because it is usually provided by the retail investor, and retail investors have a long track record of being momentum jockeys.”

This also mirrors the attitudes of investors in Australia according to GaveKal’s Australian partner, Certitude Global Investments. CEO Craig Mowll commented, “Our monthly investment Index, the CGIII, surveys the attitudes of Australian investors and our last report echoes this sentiment. In fact Asia was one of the few regions to stand its ground when investors were asked which international markets they were most keen to invest in over the next 12 months. Most other major markets saw a decline in investor appetite.”

But both GaveKal and Certitude have cautioned investors that not all boats will rise with the tide and country divergence is ever more important. There are widespread differences between the emerging markets within Asia, they agreed.

Mr Gave expanded, “Between 2003 and 2010 there was a high correlation between Asian equity markets driven by the emergence of China as an economic powerhouse, the quintupling of energy prices and the GFC and recovery, but since then the correlation has loosened tremendously. China, Hong Kong and South Korea have been underperformers as growth in China has decelerated. Meanwhile political developments in India, the Philippines and Indonesia have been drivers of the markets.”

The recent CGIII lends further support to this. Mr Mowll added, “We saw in the August CGIII that within Asia the attitudes to each country vary enormously. We saw appetite for Asia increased on the whole, however on an individual basis, interest in China was down slightly while India and Japan were on the increase. The balance of payment surplus and good inflation levels in the Philippines will also make this a stand out for investors.

“Asia is not a homogenous group and investors will increasingly look for managers that act on this and factor this into their portfolio construction.”

One of the key themes of Mr Gave’s Australian visit will be stock selection and he is expected to suggest that the days of casting a wide net are also over, with individual stock selection more important in light of the tremendous divergence within markets. Mr Gave explained, “There is a focus now to concentrate the portfolio on strong conviction ideas to add more value. If we look at Chinese internet stocks versus SOEs or Japanese banks versus exporters these are clear cases in point.

Mr Mowll concluded by saying that investors are increasingly seeking the expertise to give them the confidence to invest in Asia.

He concluded, “Australian investors are informed enough to know that Asia is not one homogenous emerging market but they may not have the time to understand the impact of demographic profiles, political and economic developments on the performance of individual markets. This is why they turn to an investment manager that is nimble enough change the portfolio quickly as the region evolves.”

Louis Vincent Gave will be visiting Australia as a guest of Certitude next week.

Craig Mowll

Demand from Australian investors for international shares increased markedly in July, according to the Certitude Global Investing Intentions Index (CGIII). The CGIII, which collates the views of over 630 actively engaged leading investors and measures their net demand for global investments, revealed that 22% of investors plan to increase their exposure to international shares, up from 16% the month prior.

In fact, investors showed certain eagerness to increase their overseas investment sooner rather than later with 38% of investors saying they plan to increase exposure within three months, up from 30% saying so in June. And 4% said they would do it in the next week (up from 1%).

Investors’ concern levels with global markets fell further this month, reaching the lowest point observed since the GFC of 5.4 out of ten, as optimism about global and domestic markets soared. Three out of four Australian investors now believe global markets will rise over the next year, up from 67% in June, and only 11% believe they will fall, down from 13% over the same period.

Investors’ expectation of returns from domestic markets are higher this month as well. On average, Australian investors expect the All Ordinaries to rise by 6% in the next 12 months, compared with an expectation of 5% in the June study.

Craig Mowll, CEO of Certitude Global Investment said: “Results this month indicate that there is real optimism about investing in general. Despite some concerns about China and recent events in the Middle East and Ukraine, investors appear undaunted about any negative effect on offshore markets. This may be one reason that demand for international funds covering multiple regions decreased slightly this month when compared with other geographic options, as increased confidence can lead investors to want to overweight to particular regions themselves.”

The US/North America remained far and away the preferred option when it came to international markets. Its popularity has been rising sharply since May this year. This is likely the result of better economic data coming out of the US, and the fact that US corporate profits and earnings are strong.

Also of note, interest in investing in Western Europe reached a 12 month peak, which again reinforced the view that investors are positive about the pace of recovery in the Eurozone despite the issues in the Ukraine.

When investors were asked about which international asset classes they favoured, equities remained by far the most popular. What was interesting however, is that interest in infrastructure investments increased sharply (13%, up from 9% in June), as did interest in hedge funds (6%, up from 3%).

When it came to the barriers stopping or limiting investors from investing more in overseas markets, a lack of knowledge was again the biggest barrier. However, and perhaps reflecting investors’ optimism, it was down by 2% pts, from 25% in June to 23% in July. Concerns about market volatility were also up by a small amount, which may account in part for the increased demand for infrastructure and hedge funds, which are designed to help manage volatility.

Commenting on the reasons for significant uptick in interest in infrastructure and hedge funds, Mr Mowll said: “Over the past 6 months, Certitude has experienced a marked increase in investor appetite for alternatives, with a particular interest rising for hedge funds. One reason may be that investors are also dialling up their exposure to equities, and understand that alternatives are a great way of cushioning volatility and managing risk. Hedge funds have little correlation with equity and fixed income markets, and in the case of infrastructure, it can satisfy investors’ desire for income.”

Mr Mowll concluded by saying that this month’s CGIII shows that Australian investors clearly have a growing appetite for international exposure, and that even political turbulence in global hotspots has not affected their optimistic outlook.

“Nonetheless, it was interesting to see that a lack of knowledge was still the most commonly cited barrier to investing overseas and that actively managed international funds remained a strong preference for investors looking to make informed decisions.

It is great to see investors acknowledging that they need to look further afield than our domestic equity markets for returns, and that there are number of investment options in addition to equities, when it comes to structuring a balanced portfolio of global assets.”

July CGIII – Key findings

1. Investors’ concern level with global markets reached a record low of 5.4 out of ten, down from 5.6 last month.
2. 22% of investors plan to increase their exposure to international shares, up 8% pts, compared with June.
3. Australian investors are more optimistic in their outlook than in June. They anticipate a rise of 6% in the All Ordinaries over the next 12 months, and 5% for global markets.
4. The most popular overseas markets were the US/North America (51%), followed by international funds covering multiple regions (27%) and Western Europe (26%).
5. 41% would like to gain exposure via direct shares (up 3% pts); 33% would like to gain exposure via ETFs (up 6% pts) and 33% prefer actively managed funds (down 3% pts).

Craig Mowll

The proportion of Australian investors planning to increase their exposure to overseas assets is higher this year compared with the same time last year, according to the Certitude Global Investing Index (CGIII). The CGIII, which collates the views of over 500 actively engaged leading investors and measures their net demand for global investments, increased over the 12 month period from end June 2013 to end June 2014.

Annual results taken at the end of June 2014 revealed a number of key insights into the global investing intentions of Australian investors:

• The appetite of all active investors for global investments rose over the year by 11% (from 157 to 175) and now sits above the 12 months average.
• Concern levels about global markets fell significantly year on year and remain at their lowest level ever, at 5.6 out of 10, down from 6.4 out of 10 at the end of June last year.
• When it came to international equities specifically, investors were slightly less bullish in their outlook this year compared with last year, with slightly fewer investors intending to increase their exposure (16% compared with 17%), but also fewer investors intending to decrease their exposure (2% compared with 5%).

Craig Mowll, CEO of Certitude Global Investment said: “Results from the CGIII over the past 12 months indicate that Australian investors remain positive about global markets generally, and have indicated that they are keen to increase their exposure to these markets.

“Even though monthly figures were volatile throughout the year, with the percentage of those intending to increase exposure to international shares reaching a high of 25% and a low of 16%, the bottom line is that the intention to invest was up on an annual basis, which may well indicate that Australian investors are continuing to actively look overseas for returns.”

US/North America most favoured market, again.

It was no surprise that the US/North America was once again the market of choice for overseas investment. The majority (46%) of investors who intend to invest overseas say they would choose the US. This was down from 50% at the same time last year, which may indicate that investors’ level of concern about other markets has dropped over the same period.

“The preference for the US as a market has been down over the past few months, so the fact that it is rising again may well indicate that investors are responding positively to better economic figures out of the US, in particular strong jobs growth. They are clearly becoming more comfortable with the pace of economic growth and with the US Federal Reserve’s management of the tapering of quantitative easing,” said Mr Mowll.

Gap closes between desire for Australian and international shares

Closer to home, the proportion of investors planning to invest in Australia fell over the year (34%, down 4% pts), whist the proportion planning to invest in international shares fell just slightly (16%, down 1% pts) over the same period.

What is more interesting is the fact that the gap between the net proportion of investors planning to invest in Australian shares (24%, down 5% pts) and those planning to invest in international shares (14%, up 2% pts) has been shrinking over time and is now much smaller than it was 12 months ago. This supports the trend that Australians are exhibiting a growing interest in international shares.

Investors again overwhelmingly favoured equities when it came to a decision about which investment class they prefer, and this preference rose over the year. Over 80% of investors favoured equities as at end June 2014, whereas the percentage was 70% at the same time last year.

Commenting on the findings as they regard international equities, Mr Mowll said: “Investors indicated that their preferred method of overseas investment was via direct purchase of shares (38% of those interested in investing overseas), although actively managed funds (36%) was only very marginally lower. These two methods of exposure have been the top two preferred all year, with each taking their turn at number one depending on the prevailing economic conditions at the time.

“The most common barrier cited by investors for not investing overseas was a lack of knowledge, with 25% saying they didn’t know enough about it. At end June 2013, over 30% of investors cited market volatility as the most common barrier to investment, now only one year later that has reduced to only 20%.

“Clearly investors are continuing to feel more at ease with international markets, and understand that an exposure to international markets is necessary in a balanced portfolio, and the fact that overall demand for international assets increased over the year really back this up.”

Mr Mowll concluded by saying that anecdotal evidence taken from the comments of investors participating in the CGIII indicated that right now their major areas of concern internationally are China and the Middle East.

“A number cited the economic slowdown and potential debt crisis in China worrying, particularly if this was to cause a sell-off in risk assets in Australia. In the same way, on-going conflict in the Middle East is sparking debate about volatility in oil prices and potential flow-on effects.

“Ultimately, however, it was great to see that Australians overall remain positive about global markets, despite some volatility during the year. Their appetite for overseas investments continues to increase, and we are hopeful that this positive trend will continue looking forward.”

Craig Mowll

Demand by Australian investors for offshore assets shows no sign of slowing down, according to the Certitude Global Investing Intentions Index (CGIII). The CGIII, which collates the views of actively engaged Australian investors and measures their net demand for global investments, jumped again in April to a record high. Following a rise of 15% in March, the CGIII rose a further 5% in April, taking it to its highest level since the Index began in June 2013.

Equities continued to lead the charge, with demand for both Australian and international shares far outstripping that for other asset classes, such as property, term deposits and exchange traded funds. In addition, the net proportion of investors planning to invest in international shares jumped sharply month-on-month.

Demand for most other asset classes remained largely steady, with the exception of term deposits which has been falling since February this year. The downward trend continued in April, with investors again signalling their lack of appetite for this more defensive investment option.

Craig Mowll, CEO of Certitude Global Investments said: “Results from the CGIII in April suggest that far from being influenced by geo-political events, such as turbulence in the Ukraine and its ramifications for global markets, active investors continue to see increased opportunities in international investment markets.

“While it is true that a number of investors expressed concerns about some of the big issues, including instability in the Ukraine and Russia, a slowdown in the Chinese economy and the possibility of another market crash, this clearly did not influence their positive outlook for international markets. In fact, the CGIII revealed that the level of concern about global markets across the board actually decreased in April.

“Given the on-going weakness in parts of the Australian economy combined with the looming prospect of a tough Federal Budget, it is not altogether surprising that Australian active investors, traditionally overweight Aussie equities, are seriously considering a greater allocation to offshore markets.

“This is borne out by the results of the CGIII, which indicated an increasing convergence in demand between Australian and international equities in April. When combined with the fall in demand for term deposits, it appears that investors are gaining confidence with equities, and view them as a suitable alternative to term deposits, which continue to struggle to perform as interest rates languish at historically low levels.”

Interest in multiple region managed funds gains ground

When investors were asked which international markets were of most interest over the next 12 months, the US/North America again came in as the clear favourite, even though the level of interest was down slightly compared with March.

On the other hand, international funds covering multiple regions were once again investors’ second choice, but contrary to demand for US/North America, demand for these funds rose compared with all other markets, the notable exception being emerging markets, which also rose.

In addition, the intention to gain international exposure via actively managed funds increased by 7 percentage points to a record high (46%), compared with direct purchase of overseas shares (38%) which also increased, but only by 3 percentage points.

Commenting on the increase in demand for managed funds investing overseas, Mr Mowll said, “It is interesting to note that as demand for international exposure increases, demand for international funds covering multiple regions has also increased. One explanation may be that investors understand the challenges inherent in trying to be a specialist in every international market. Choosing to invest with an experienced investment manager, capable of structuring a portfolio across multiple regions makes good sense.

“In fact, this hypothesis is supported by the fact that nearly a quarter of all investors said that lack of knowledge was the number one barrier preventing them from investing in international markets. In a further sign that investors are less concerned about market volatility than they have been in the past, lack of knowledge ranked as the biggest barrier to investing overseas in April, whereas market volatility was cited as the number one barrier in March.”

When investors were asked when they intend to next invest overseas, nearly half (41%) of respondents said that they would like to do so within 3 months. This was up from 37% in March.

Mr Mowll concluded: “It is promising to see that demand for Australian and international shares continues to converge over time, showing an increased appetite for offshore investments and a desire for an asset allocation less heavily skewed to Australian equities. It is not surprising investors are choosing managed funds to gain exposure to international markets given their concern about a lack of knowledge and information; an expert fund manager is the best choice to help them make optimum investment choices.”

April CGIII – Key Findings

1. Net demand for international assets increased in April 2014 by 5%, following an increase of 15% in March 2014 – the Certitude Global Investing Intentions Index now sits at 186, up from 177 in March.

2. The net proportion of investors planning to invest in international shares increased to 18% in April, up from 16% in March. Meanwhile, the convergence between demand for Australian and international shares continued, while demand for term deposits continued to fall month-on-month.

3. The US/North America remained the number one market of interest, followed by international funds covering multiple regions. In April, interest in the US/North America fell slightly from 48% to 46% whereas interest in international funds covering multiple regions continued to rise to 32%.

4. Intention to gain international exposure via actively managed funds increased to 46%, up 7% pts) and direct purchase of overseas shares increased to 38% (up 3% pts). Intention to gain international exposure via actively managed international funds is now at a record high.

5. The number of investors intending to invest internationally in the next three months increased to nearly half (41%), up from 37% in March.

]]> Certitude Global Investing Intentions Index Report shows convergence in demand for Australian and international shares

Craig Mowll

Demand by Australian investors for offshore assets shows no sign of slowing down, according to the Certitude Global Investing Intentions Index (CGIII). The CGIII, which collates the views of actively engaged Australian investors and measures their net demand for global investments, jumped again in April to a record high. Following a rise of 15% in March, the CGIII rose a further 5% in April, taking it to its highest level since the Index began in June 2013.

Equities continued to lead the charge, with demand for both Australian and international shares far outstripping that for other asset classes, such as property, term deposits and exchange traded funds. In addition, the net proportion of investors planning to invest in international shares jumped sharply month-on-month.

Demand for most other asset classes remained largely steady, with the exception of term deposits which has been falling since February this year. The downward trend continued in April, with investors again signalling their lack of appetite for this more defensive investment option.

Craig Mowll, CEO of Certitude Global Investments said: “Results from the CGIII in April suggest that far from being influenced by geo-political events, such as turbulence in the Ukraine and its ramifications for global markets, active investors continue to see increased opportunities in international investment markets.

“While it is true that a number of investors expressed concerns about some of the big issues, including instability in the Ukraine and Russia, a slowdown in the Chinese economy and the possibility of another market crash, this clearly did not influence their positive outlook for international markets. In fact, the CGIII revealed that the level of concern about global markets across the board actually decreased in April.

“Given the on-going weakness in parts of the Australian economy combined with the looming prospect of a tough Federal Budget, it is not altogether surprising that Australian active investors, traditionally overweight Aussie equities, are seriously considering a greater allocation to offshore markets.

“This is borne out by the results of the CGIII, which indicated an increasing convergence in demand between Australian and international equities in April. When combined with the fall in demand for term deposits, it appears that investors are gaining confidence with equities, and view them as a suitable alternative to term deposits, which continue to struggle to perform as interest rates languish at historically low levels.”

Interest in multiple region managed funds gains ground

When investors were asked which international markets were of most interest over the next 12 months, the US/North America again came in as the clear favourite, even though the level of interest was down slightly compared with March.

On the other hand, international funds covering multiple regions were once again investors’ second choice, but contrary to demand for US/North America, demand for these funds rose compared with all other markets, the notable exception being emerging markets, which also rose.

In addition, the intention to gain international exposure via actively managed funds increased by 7 percentage points to a record high (46%), compared with direct purchase of overseas shares (38%) which also increased, but only by 3 percentage points.

Commenting on the increase in demand for managed funds investing overseas, Mr Mowll said, “It is interesting to note that as demand for international exposure increases, demand for international funds covering multiple regions has also increased. One explanation may be that investors understand the challenges inherent in trying to be a specialist in every international market. Choosing to invest with an experienced investment manager, capable of structuring a portfolio across multiple regions makes good sense.

“In fact, this hypothesis is supported by the fact that nearly a quarter of all investors said that lack of knowledge was the number one barrier preventing them from investing in international markets. In a further sign that investors are less concerned about market volatility than they have been in the past, lack of knowledge ranked as the biggest barrier to investing overseas in April, whereas market volatility was cited as the number one barrier in March.”

When investors were asked when they intend to next invest overseas, nearly half (41%) of respondents said that they would like to do so within 3 months. This was up from 37% in March.

Mr Mowll concluded: “It is promising to see that demand for Australian and international shares continues to converge over time, showing an increased appetite for offshore investments and a desire for an asset allocation less heavily skewed to Australian equities. It is not surprising investors are choosing managed funds to gain exposure to international markets given their concern about a lack of knowledge and information; an expert fund manager is the best choice to help them make optimum investment choices.”

April CGIII – Key Findings

1. Net demand for international assets increased in April 2014 by 5%, following an increase of 15% in March 2014 – the Certitude Global Investing Intentions Index now sits at 186, up from 177 in March.

2. The net proportion of investors planning to invest in international shares increased to 18% in April, up from 16% in March. Meanwhile, the convergence between demand for Australian and international shares continued, while demand for term deposits continued to fall month-on-month.

3. The US/North America remained the number one market of interest, followed by international funds covering multiple regions. In April, interest in the US/North America fell slightly from 48% to 46% whereas interest in international funds covering multiple regions continued to rise to 32%.

4. Intention to gain international exposure via actively managed funds increased to 46%, up 7% pts) and direct purchase of overseas shares increased to 38% (up 3% pts). Intention to gain international exposure via actively managed international funds is now at a record high.

5. The number of investors intending to invest internationally in the next three months increased to nearly half (41%), up from 37% in March.

The post Australians’ intentions to invest overseas reaches record high appeared first on AdviserVoice.

Craig Mowll

After a volatile start to 2014, appetite for overseas assets was up with the March Certitude Global Investing Intentions Index (CGIII) jumping by 15% to the second highest level since inception (June 2013). This just one month after intentions to allocate off-shore hit a low in February.

The Certitude Global Investing Intentions Index (CGIII) collates the views of over 500 actively engaged leading¹ investors and measures their net demand for global investments. It forms part of the larger Certitude Global Investing Intentions Report produced each month by Investment Trends.

According to the Report, demand for international shares is likely to be driving the increase in intentions to invest globally. The net percentage of investors intending to allocate to international equities rose to 16% in March (up from 14% in February). Meanwhile, intentions to increase exposure to Australian equities waned, dropping from 29% in February to 23% this month.

Craig Mowll, CEO of Certitude Global Investments said: “These results suggest that investors are rethinking their geographic allocation to take advantage of international investment opportunities, shifting assets from domestic to international equities. This is a smart diversification move for many Australian investors who historically are overweight domestic equities, meaning their portfolios carry a lot more risk should our economy experience a downturn.

“This month we also saw that investors’ concern level with global markets was just slightly above the all-time low from January 2014, despite many investors expressing concerns over China’s economic stability and the situation between Russia and Ukraine. The slightly lower fear level corresponds to the high demand we’re seeing for international shares.”

Managing volatility a theme for investors

The report also revealed an uptake of investors looking to use hedge funds to gain entry into the international market. Equities continue to be the asset class of choice for a large majority of those intending to allocate offshore, according to this month’s findings. However, March saw a pickup in interest for hedge funds, which rose 5 percentage points. 7% of those looking offshore said they are interested in hedge funds to gain global exposure.”

Commenting on this rise, Mr Mowll said, “A number of findings this month confirm that managing volatility is central to investors’ decision making when thinking about global and domestic opportunities. The increased intentions to allocate to hedge funds for global exposure is indicative of this; hedge funds allow investors to benefit from market upswings but protect on the downside, helping investors manage the volatility in their portfolios – which is a commonly cited concern each month in the Report.

“In fact, the findings from the CGIII Report on the appeal of hedge funds are congruous with the trend we’re seeing in the Certitude business. The LHP Global Long/Short Fund experienced one of the highest months ever in terms of inflows and this has largely been related to its low volatility, low beta and consistent performance throughout many market cycles over the past 14 years.

When asked how they plan to obtain international exposure, more investors are looking to actively managed funds (39%) than through directly purchasing shares of global companies (which decreased 4 percentage points to 35%). Mr Mowll commented that the findings indicate investors would prefer to leverage the expertise of a fund manager to make global investment decisions, rather than go it alone.

The most commonly named barriers to investing offshore provide further confirmation that volatility is a central concern of investors. Market volatility was the top barrier to investing overseas (24%), followed closely by investors’ lack of knowledge (22%) and exchange rate volatility (22%).

Regional investments appear to be more popular than a country-specific approach as revealed by trends in the CGIII Report. The US/North America remains the most popular region for investors looking offshore, rising 5 points to 48%. International funds covering multiple regions is the second most popular (stable at 28%), followed by Asia (23%) and Western Europe (22%), which both saw a rise in March. Meanwhile, China declined in popularity by 5 percentage points to 12%

Mr Mowll concluded: “Managing volatility risk will always be a key challenge for investors trying to construct a portfolio suited to their risk profiles. It is promising to see that Australian investors are looking at different ways to diversify their investments and still achieve an appropriate level of risk, bymaking regional investment plays (as opposed to country-specific), looking at actively managed funds, including hedge funds, and weighting portfolios away from a domestic bias.”

March CGIII – Key Findings

Results from February’s Certitude Global Investing Intentions Index (CGIII) Report indicate that advised investors are more bullish in their intentions to invest offshore and they also hold much more stable views towards global investments than their non-advised counterparts.

The Report, produced each month by Investment Trends, collates the views of over 700 actively engaged leading investors and measures their net demand for global investments.

The latest CGIII Report reveals that non-advised investors’ net demand for international assets went from a high of 187 in November to a current low of 131 in just three months. Meanwhile, the intentions of advised investors remain stable by comparison, sitting at 167 in February.

This month, overall net demand for global investments decreased fifteen per cent to 154 from its peak in January. Despite the decrease, a large proportion of Australian investors still recognised a need to increase their global diversification with 39% agreeing that they need more international investments in their portfolio.

Global equities is by far the most popular asset class to obtain this exposure – 81% of investors who intend to invest overseas are interested in global equities when allocating offshore. By comparison, international property increased in popularity this month and is the second most popular asset class with those planning to invest globally, sitting at 17% (up from 9%).

Craig Mowll, CEO of Certitude Global Investments, said: “In January, investors signalled a very strong interest in investing globally when net-demand reached a peak. An interesting finding we saw in February is that the proportion of investors currently holding shares in overseas companies has increased significantly (37%, up 16% pts from January), which may be a reflection of last month’s intention turning to action.

“This month’s results also highlight a trend we’ve seen that investors with a financial adviser have steadier intentions when it comes to investing overseas than non-advised investors. This may suggest that advised clients are making more long-term considered decisions rather than having ‘knee-jerk’ reactions to market movements.”

Barriers to global investing

Behind the decrease in the Index are investors’ most commonly cited barriers to investing offshore – exchange rate volatility was cited as a concern for 23% of investors along with market volatility (21%) and lack of knowledge (21%). Since the inception of the CGIII Report (May 2013), these three barriers have consistently been the most frequently named by investors.

Mr Mowll commented, “The anecdotal comments we got from investors in this month’s Report corroborate these results. Investors name fears like loss of capital, uncertain markets and conflicting forecasts for market performance. It’s unsurprising then that advisor lead investors feel more positively about global investment opportunities than others and remain more stable in their intentions – they have the benefit of an advisers’ insight and experience of market cycles to manage volatile times. They are therefore more likely to stay the course of exploring the diversifications benefits from investing globally.”

USA remains top region, but decreasing its lead

Of the top three regions investors plan to increase exposure to, both the US/North America and Asia declined in popularity while international funds covering multiple regions remained steady. The US/North America is a perennial top choice region for investors looking to allocate offshore; this month 43% of those planning to invest overseas say US/North America is of interest, down from 52%in January. Asia too, which has consistently been among the top three, fell by 10 % pts to 18%.

Meanwhile appetite for international funds covering multiple regions remains strong, with 28% of investors considering such funds to gain broad global exposure. Mr Mowll commented that investors may be attuned to recent chatter of a downturn in Asian markets.

February CGIII – Key Findings

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

1. 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).
2. 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.
3. 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.
4. 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.
5. 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.

Investor seeking overseas investment options: Certitude

Prospective buyers of international assets continue to outnumber sellers according to the Certitude Global Investing Intentions Index (CGIII) with Self-Managed Super Fund and High Net Worth investors leading the way.

The CGIII Report found that SMSF investors are much more eager to invest offshore than their non-SMSF counterparts with 50% planning to do so within the next 3 months (in comparison to 33% of non-SMSF investors).

Meanwhile, HNW investors also signalled their bullishness toward international investments with the Index returning 190 points in November, compared to 174 points for all active investors in the same period. This marks the highest level of the Index for HNW investors to date.

The CGIII Report, produced each month by Investment Trends, collates the views of over 700 actively engaged leading investors. On the whole, 43% of all investors surveyed believe they need more international assets in their investment portfolio, up 8% points from October. This is in line with a corresponding decrease in the proportion expecting healthy growth in the Australian economy (59%, down 6% pts from October).

Craig Mowll, CEO of Certitude Global Investments said: “Last month we saw a strong uptick in Australian investors’ intentions to invest overseas and this month that intention was again signalled clearly, particularly from HNW and SMSF investors.

These investors can often be leading indicators of the rest of the market in identifying and taking advantage of the vast world of investment opportunity that exists outside of Australia.”

US/North America remains top choice, but gap is closing

The US remains the dominant international market of interest for those looking to invest overseas, despite a slight decline from October (38%, down 2% pts from October). While this region has consistently held the most allure for investors since the inception of this study, the gap is closing between all markets. November’s CGIII survey results found that both the US and Asia dropped in popularity, while international funds covering multiple regions, Western Europe, China and Japan all increased (see Figure no. 3, below).

Mr Mowll commented that the CGIII findings suggest that investors are not fully aligned with one geographic location or another, potentially lacking knowledge on where to allocate offshore assets.

“We are starting to see a convergence in terms of the overseas markets that investors are paying attention to when thinking about allocating offshore. One possible explanation is confusion from investors on where they should go to achieve true diversification benefits from international investing.”

Issues such as lack of knowledge, research or funds are becoming more significant barriers than market concerns When asked about barriers to investing overseas, ‘insufficient funds’ was named by the highest percent of investors (21%) as their main barrier, a large increase from 6% citing this reason in October. Of the top five barriers cited however, only one reflects concern in markets while the rest relate to a lack of knowledge or research available – 9% of investors say they don’t know enough about international investing and 7% said lack of research deterred them from allocating overseas.

Commenting on these findings Mr Mowll said, “The CGIII has been a valuable tool in evaluating where, when and how investors intend to invest internationally. This month, the stated barriers to international investing as well as the apparent indecision on where to allocate indicate that Australian investors feel insufficiently equipped to make informed decisions about which region or asset class they should invest in. This is something that global fund managers could be aware of when targeting Australian investors.”

November CGIII – Key Findings