Global Growth with Morgans Financial
Kicking yourself because you didn’t get a chance to invest a buck in the projects Jeff Bezos and Elon Musk were developing a few years ago? John Caruso learns that it’s not as hard as you think to be exposed to sectors and companies beyond the ASX.
Many Aussie investors are looking for opportunities to diversify their portfolios, gaining exposure to industries that are not well represented locally. One way to achieve this is to invest in overseas stocks, such as Google, Apple, and Amazon. These brands are leaders in the global tech sector, which is growing at a remarkable pace, especially those working in the AI space. And there are other sectors that may appear beyond our investment reach.
Healthcare for example across Asia with its large ageing population is booming now, so an investment focus on these areas could see decent growth for your portfolio.
“There are two ways of getting yourself exposure. You can either buy those familiar, globally recognised brands directly or you can get into exchange traded funds or ETFs”, explains Brent Plasier, Senior Private Client Advisor with Morgans Noosa.
In simple English, ETFs are a “mixed bag” of overseas stock in one or several different sectors, depending on your risk profile.
“ETFs will secure a basket of shares for you and each fund has a mandate,” Brent explains. “They’ll follow one of the indices or they’ll have a special investment mandate. For example, some are hedged to the currency, and there are some that are unhedged. There are ones that will cover the largest companies in the world with 60% exposure to US companies which includes Apple and Meta and then there are themed ETFs, so if you’re looking at healthcare or cybersecurity you can invest in those niche sectors.”
With more than 2,000 companies listed on the ASX, why would Aussie investors be looking overseas?
“Well, the US market on average, outperforms the Australian market over time,” says Brent. “The ASX 200, including dividends, averages around eight to nine percent a year, whereas the US market will be around ten percent per year. And investors are exposed to companies and sectors that simply aren’t represented here, for example the artificial intelligence and semiconductor sectors in the US and Asia are huge.
“In Australia our market is focused more on financials and materials.”
Before committing your hard-earned dollar into a foreign company, evaluating the risks and challenges of doing so are always prudent.
“Fluctuating currencies can affect your investment,” Brent advises. “Earlier I mentioned hedged and unhedged funds. ETFs which are unhedged will go with whatever the currency is doing; however you can also buy exchange-traded funds that are hedged, which means that the currency fluctuations are removed from the investment equation.
“At Morgans Noosa, we understand that it can seem complicated and we are happy to talk it through with you and explain exactly how it works when you come in and see us.”
Ultimately, your exposure to overseas markets will depend on several factors, including financial goals, retirement age, and portfolio balance.
“When a client approaches us for advice, we look at their risk profile to determine what kind of investor they are,” Brent says. “There’s always going to be an allocation towards international if the investor is looking for growth; and as I said earlier, the US market tends to outperform the Australian market over time so it’s good to have an allocation in that pie.”
I might have missed the boat when Steve Jobs went public in 1980! If Jeff Bezos had called my Motorola flip in 1997 asking for money, I might have hung-up on him – and who knew where Elon Musk would end up when he listed in 2010?!
The point is, there are industries and sectors developing beyond our shore that are worth investigating and an allocation in that direction could prove profitable. But always best to ask the experts.
With almost 20 years operating in Noosa under Principal Andrew Stafford and as part of Australia’s largest wealth management firms with over 60 offices around the country, the best advice I could give is to ask the experts.
Disclaimer: The information in this article is of a generic nature. Please seek professional advice tailored to your specific needs before making any investment decisions.
