Financial Planners Tell Australian Investors To Seek Growth Offshore

Getty/ Sergio Dionisio

There’s a big push by Australian investors to sink more money into growth assets offshore, according to a comprehensive survey of financial planners.

Between 2012 and 2013, the allocation of new client investments to international assets jumped 5 percentage points to 31 per cent of new client investments, the highest level since 2008.

Much of that growth appears to have been driven by client demand, as well as planner recommendations.

Investment Trends Senior Analyst Recep Peker says the survey results suggest the improving performance of overseas markets has seen a spike in investor interest over the last year.

“Improved investor confidence and low interest rates have prompted planners to cut allocations to cash and direct more capital towards listed investments and other growth assets,” says Peker.

“Now an increasing proportion of that money is being invested offshore.”

The August 2013 Adviser Product and Marketing Needs Report is based on a survey of 734 financial planners between July and August 2013.

Key points of the survey:

  • US assets have become increasingly attractive as the North American economic recovery gains pace. Asked which regions they would encourage clients to invest in over the next 12 months, 40 per cent of planners nominated the US or North America, up from just 10 per cent in 2009.
  • Interest in China has dwindled, with the proportion of planners planning to recommend single-region Chinese exposure falling from 35 per cent in 2010 to around 12 per cent in 2013.
  • Growing investor and planner confidence has seen money start to flow from cash into growth assets
  • Advised clients are allocating more of their capital to international investments than at any time since the GFC, with US assets especially popular
  • A growing proportion are using ETFs (Exchange Traded Funds) to gain international exposure. The proportion of offshore investments made through ETFs grew 40 per cent over the last year, from 5 per cent of all investments to 7 per cent
  • International equity funds continue to be the dominant method of accessing international assets, accounting for 65 per cent of offshore investments by planners in 2013