Into the mind of the sophisticated investor

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Sophisticated investors have given a hint as to where they think the money is, and it’s not local.

High net worth SMSF clients intend to increase their investments in overseas assets, according to the Certitude Global Investing Intentions Index.

The landmark study, produced by Investment Trends, surveyed nearly 800 leading investors, consisting of high net worth individuals, SMSFs and higher income investors. The research found that they are looking to increase their international allocation in their portfolios by 70%.

Craig Mowll, CEO of Certitude Global Investments said the demand is coming from an underperformance of the Australian market. “Australia’s only 2% of the overall world opportunities, so there’s a big universe out there to look at. I think people, since the global financial crisis, have had a very strong domestic bias, and now that they’re seeing the domestic market come back a bit, they’re looking off shore.”

He said that the majority (70%) are interested in overseas assets. International commodities are second, tied with global infrastructure.

“Many institutions actively topped up their overseas allocations some time ago, either through locally based managers or by dealing directly with offshore funds or investing directly in offshore assets. The leading investor is now following that lead.”

Mowll said the index provided valuable information for advisers, because it could help them gain an idea of what their clients are thinking. “These people are getting advice, and in a lot of cases they’re deriving their own conclusions. Where I think this is helpful is to give people a very responsive amount of information where they can look over what their clients are thinking.”

Conducting the index monthly meant that they would be in touch with clients more frequently than some of their advisers, he said.

“Our research also indicates that many Australian investors do not feel sufficiently well-informed to make offshore investment decisions, with 21% citing a lack of knowledge as a barrier to overseas investing.

“Global investment opportunities need to be fully understood before investing. Volatility is outside investors’ control but having the right information is easier to achieve with the right partner.”

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