SMSF investors are missing out on huge global investment opportunities that would be difficult to find in many Australian companies.
This is according to independently owned global equity manager Insync, which cites to the latest ATO figures showing that direct overseas shares account for only 0.4% of total SMSF assets.
Insync’s head of research, Marcus Tuck, said this indicates investors are missing out on huge opportunities.
“There are many exceptional global companies that have impressive track records of compounding earnings and dividends at a rate and consistency that would be difficult for all but a handful of Australian companies to achieve,” he said.
And although the amount of overseas shares in SMSF is growing, it is still a miniscule percentage of the total SMSF assets, which are dominated by Australian listed shares, cash and term deposits, direct investment properties, and managed investment trusts, he said.
Australia’s share market is also quite concentrated, with financials and materials accounting for 60% of total market capitalisation.
“Banks now operate in a lower credit growth environment, and by their nature, take on wild risks associated with high financial leverage, while mining companies are subject to wild swings in commodity prices as we have seen,” Tuck said. “Most local investors are missing out on diversification into world class companies in sectors that are under-represented on the Australian share market.”
These include technology, pharmaceuticals, food and beverage, consumer brands, aerospace, and luxury goods, he said, adding that many of those companies are linked to the massive rise in the ‘emerging consumer’ in parts of the developing world.
“It’s simply a fact that there are far more exceptional, world class companies listed overseas that there are in Australia.”
Tuck said SMSF investors who lack the necessary knowledge to invest directly in global shares should consider having their portfolio professionally managed.