Investors to increase overseas exposure


By Krystine Lumanta

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The trend for investors to grow their exposure to overseas assets is continuing, according to the Certitude Global Investing Intentions Index (CGIII) for August.

The index, which tracks net demand for global investments, rose to 175 points in August, which represented a 3.5 per cent increase from July at 169 points, and an 11.4 per cent rise in the past quarter.

In addition, 43 per cent of the investors surveyed believed they needed more international exposure in their portfolios, which remained consistent over the last quarter.

Furthermore, the timing for intended overseas allocation continued to shrink, with 36 per cent of investors stating they intended to make their next overseas investment within the next three months, the index found.

Over the past rolling quarter, the number of investors planning to go global in the next three months had grown by 33 per cent.

“This research has shown that not only are investors more interested in global investments, but they are also becoming more serious about actually allocating assets overseas,” Certitude chief executive Craig Mowll said.

“What has changed is that their intentions to act on this by increasing their overseas assets have risen steadily, according to the CGIII.

“The research confirms that Australian investors, who have long held a very strong domestic bias, recognise the opportunities for growth, income and diversification that come from investing globally.”

The index revealed the United States/North America held a firm lead on other regions in terms of popularity with investors over the quarter, with 51 per cent of investors interested in gaining overseas exposure indicating an interest to invest in the region in the 12 months from August.

However, China and Western Europe gained in popularity during August.

Western Europe was indicated as a preference by 17 per cent of investors looking to invest globally, which represented a 5 percentage point increase from July.

Similarly, 15 per cent of investors were interested in China for their upcoming global investments, which was a 3 percentage point increase from July.

In terms of asset classes, while equities had consistently held the most interest to investors looking overseas, fixed income had begun to rise in popularity, with 7 per cent stating they would use it, up from 4 per cent, according to the CGIII.

Though it remained a relatively small proportion of investors’ interest when looking at global investment opportunities, the research showed significant increases in certain fixed-income categories in the past quarter, Mowll said.

“This quarter’s findings show consistent growth in the appeal of global investments for Australian investors, as these investors become even more attuned to the opportunities available offshore,” he said.

“We believe the intentions of these sophisticated investors can be seen as a leading indicator for where and when other Australians will move to specific markets and asset classes around the globe.

“With Australia representing just 2 per cent of the investment opportunities out there, investors stand to reap the benefits from diversifying offshore.”

The CGIII is produced by Investment Trends and collated the views of 986 respondents in August.

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