Offshore investing a smart move in a world of uncertainty
Aussie shares had a great 2019 but looking beyond our borders may prove an investment winner this year. Here’s what the experts say.
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Going global is likely to be a smart sharemarket investment strategy this year.
In 2019, Aussie stocks delivered their best returns in a decade, up almost 24 per cent including dividends, and market forecasters don’t expect a repeat performance in 2020.
Diversifying with shares outside Australia is a no-brainer among super funds and professional investment managers, but many individuals still stick to their own backyard.
This overexposure is dangerous, and unnecessary now that it’s easier than ever to invest overseas.
Online and full-service stockbrokers allow people to buy overseas shares directly, managed funds and exchange-traded funds hold a broad range of international stocks, and investment platforms such as stake.com.au offer access to US stocks with as little as $50.
“With more opportunity available outside the local market, there is little reason to limit your investing,” said Stake founder and CEO Matthew Leibowitz.
“The more access to opportunity you have, the more chance you have of being successful.”
Mr Leibowitz said people investing overseas should understand their capital was at risk, just like it was with any investment.
He said a survey of some of Stake’s 50,000 users found they expected Tesla, Disney and Microsoft to do well this year, but planned to avoid Netflix, Uber and oil company investments.
Investment forecasters are upbeat about the outlook for global shares this year, with the caveat that anything can happen in a world with a US-China trade war and potentially a US-Iran real war.
Aviva Investors head of investment strategy Michael Grady said global share valuations were at or above long-term averages but his firm’s view was still positive.
“A gentle recovery in earnings should also help,” he said.
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AMP Capital chief economist Shane Oliver said improving global growth and low interest rates should drive reasonable investment returns this year.
“Global shares are expected to see total returns around 9.5 per cent, helped by better growth and easy monetary policy,” he said.
The best performers were likely to be emerging market shares and non-US stocks, Dr Oliver said.
Global asset manager Eaton Vance’s co-director, Eric Stein, said he expected global economic activity to improve.
“I think all eyes are going to be on the U.S. presidential election in 2020 — both the Democratic primary process as well as the general election in November,” he said.
“Given how different the parties and likely candidates will be, we could see very different market outcomes.”
US STOCKS TIPPED TO SHINE
• Tesla
• Disney
• Microsoft
• Advanced Micro Devices
• Renewable stocks
Source: Stake.com.au
Originally published as Offshore investing a smart move in a world of uncertainty