Investors look globally for returns
CommSec has confirmed findings from a recent Investment Trends report (August 2015 Adviser Product and Marketing Needs Report) — as reported by Money Management - that planners and investors are increasingly turning to international investments as confidence in the Australian share market wanes.
According to CommSec, it has seen a sharp increase in demand for foreign owned shares, with the number of customers opening up international trading accounts growing by almost 50 per cent in the past six months, compared to the preceding half year.
The trend is backed by findings in the Investment Trends report, with Investment Trends Head of Research for Wealth Management, Recep Peker saying the confidence of planners in the Australian share market had fallen as a result of the continuing volatility of the local share market, with planner expectations of share market returns at "the lowest level we've ever observed — even lower than during the depths of the GFC in late 2008".
With this drop in confidence with the local market, CommSec managing director, Paul Rayson said Australians are becoming more confident with investing in foreign-based companies.
"We've seen our clients increasingly looking at overseas markets to diversify their portfolio," Rayson said. "However, [the Australian market] makes up only less than three per cent of global market capitalisation. Investors are becoming more sophisticated and are looking for broader opportunities."
Rayson said CommSec is seeing investor demand in certain sectors, including international technology stocks, which have grown more than 67 per cent in the past 18 months.
"Investors are seeing quality companies like Apple and Google in growth sectors and want to get involved," he said.
Another trend CommSec is seeing is the growth of individuals investing in internationally-based Exchange Traded Funds, which have increased fourfold since 2013. Rayson said this trend shows that investors are increasingly looking for a simple, low cost way to invest offshore and diversify their investment portfolio.
The CommSec analysis supports the findings in the Investment Trends report, which also show the usage of international assets by planners for clients has hit a new high. According to Peker, planners invested 39 per cent of new client investments into international assets over the last 12 months, which was the highest level since the start of the Investment Trends study back in 2008 — a 13 per cent increase on the 2012 result.
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