Appetite for global investing lifts

More Australian investors plan to increase their exposure to overseas assets this year.


By Krystine Lumanta

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More Australian investors intend to increase their exposure to overseas assets compared with this time last year, according to the Certitude Global Investing Intentions Index (CGIII) for June.

The index, which tracks net demand for global assets monthly, rose from 157 points in June 2013 to 175 points at the end of June this year, an 11 per cent gain..

The CGIII is produced by Investment Trends and collates the views of more than 500 leading investors, including high net worth individuals, self-managed super funds and higher-income earners.

The CGIII revealed concern levels for global markets fell significantly year-on-year and remained at a historic low of 5.6 out of 10, down from 6.4 at the end of June last year.

When it came to international equities, investors were slightly less bullish in their outlook this year compared with last year, with slightly fewer investors intending to lift their exposure, 16 per cent from 17 per cent, but also fewer investors intend decreasing their exposure, 2 per cent from 5 per cent.

Certitude Global Investments chief executive Craig Mowll said the results from the CGIII over the past 12 months indicated that Australian investors remained positive about global markets generally and were keen to increase their exposure to these markets.

The lowest results recorded were in September at 160 points, February at 154 points and May at 170 points, while the highest were in January at 182 points and April at 186 points.

“With regards to volatility versus events, the recurring theme regarding the decline months have been based on events (cause) creating volatility (effect),” Mowll told financialobserver.

“For example, in September there were concerns in the Middle East and the Eurozone that created market and exchange rate volatility, causing barriers of concern in investing globally.

“In February it was concerns relating to China and the Australian economy creating these barriers, then the Ukraine-Russian crisis and Australian economy concerns built the same barriers again.

“In higher months fewer events occurred and therefore the effect on volatility was less, thus giving comfort to investors globally.”

Mowll said the bottom line was that Australian investors were actively continuing to look overseas for returns.

Commenting on whether he had any expectation of another jump in appetite in 12 months should global markets remain steady, he said it was possible.

“My comments are pure speculation at this stage, but we do anticipate the index rising somewhere between 8 to 12 per cent next year,” he said.

“We see this occurring from renewed comfort in global markets, particularly equities, albeit there will be events that create volatility over the next 12 months. Overall, however, we believe the signs are showing an increase.”

The United States-North America was the most favoured market once again for overseas investment, with 46 per cent of investors who intend investing overseas indicating a preference for the United States.

Closer to home, the proportion of investors planning to invest in the Australian market fell over the year to 34 per cent, down 4 percentage points, while the proportion of investors planning to invest in international shares fell just slightly to 16 per cent, down 1 percentage point over the same period.

When it came to preferred investment classes, as at the end of June this year more than 80 per cent of investors favoured equities, jumping from 70 per cent the in June 2013.

“Investors indicated that their preferred method of overseas investment was via direct purchase of shares at 38 per cent, although actively managed funds was only very marginally lower at 36 per cent,” Mowll said.

“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, 25 per cent stating they didn’t know enough about it.”

At the end of June last year more than 30 per cent of investors cited market volatility as the most common barrier to investment, the CGIII said. That was reduced to 20 per cent only one year later.

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