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

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Global investing

The world is now a better place to invest from an equity perspective than it has been since the Global Financial Crisis (GFC), according to US-based, global investment manager, William Blair Investment Management (William Blair).

Ken McAtamney, Co Portfolio Manager of William Blair’s Global Leaders Strategy, who visited Australia this week, said the outlook for global investing has improved as a result of the US being able to avoid the fiscal cliff; the political will in Europe to save the Euro and the Euro zone and re-acceleration of growth in China.

“Our view is that the outlook is more positive than is generally believed,” Mr McAtamney said. “But a recovery is not going to be smooth – it is going to come in fits and starts.”

William Blair Investment Management has more than $47 billion in assets and provides portfolio management for global equities, emerging markets equities, US equities, US fixed income and alternative assets.

Global Opportunities
Mr McAtamney said there are good opportunities in each of the three major global regions.

The US
In the US, Mr McAtamney said the housing market is particularly attractive. “Activity in the housing market is a large part of the US economy,” he said. “If you look at the related, derivative jobs around that, it could represent about a third of potential employment in the US – so that’s a sector in the US that we are very focussed on.”

Europe
In the European region, Mr McAtamney said it is very clear that the sovereign financial situation has been de-risked. “The political will to save the Euro and save the Euro zone is clearly there and thus the European financial sector is fairly interesting,” he said. “It has been controversial and relatively unloved and therefore there are some good valuation opportunities for  the better companies there.”

Asia
Looking to Asia, Mr McAtamney said the region’s diversity makes it an attractive proposition. “The areas that could be favourable run really the entire gamut across all sectors,” he said. “So whether it is resources in Australia, consumer companies in China or industrial exporters in Japan, we think there are quite a few compelling opportunities.”

China, however, is particularly interesting.  “We think they have clearly stabilised the slowing of their growth and to some extent we are seeing a re-acceleration – and we think that is critical, not just for China, but for the region overall.”

William Blair has an Australian and New Zealand presence after launching in Sydney late last year.

“We have capabilities that have been successful for sophisticated investors around the globe,” Mr McAtamney said. “We believe our approach and our investment culture fit well with our assessment of the Australian institutional investing market, which is also extremely sophisticated.”

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