International Shares: An Important Part of any Portfolio

Monday, 04 December 2017 09:29

Sometimes as advisors we are asked by clients, “Why do I need to invest in International Shares, Aussie Shares are better…right?”

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As Australians, we are inherently proud, and support Australian products and services as this is the way that we have been educated over many years. This way of living is great, however, when it comes to investments, there is also an argument to diversify and spread the risks of your investments further than just the Australian markets.

Here are a few reasons, why it is important to invest within International Shares as part of a portfolio:
1. In terms of the Australian Stock Exchange (ASX), it represents 1.75% of the total share markets of the world.
2. 53% of the ASX is dominated by only 2 sectors, financial services and resources.
3. The top 10 companies on the ASX represent 46% of the market.
4. Healthcare and Information Technology represent 7% and 1.5% respectively on the ASX, however represent 28% of the global share market.

What is the impact of this?

By investing all your funds within the ASX, your investment portfolio is not diversified sufficiently. The logic behind this statement is that if the ASX represents 1.75% of the world markets, where is the rest of the 98.25% invested? Investing solely in the ASX means that we are missing out on the other , and is being held within a smaller stock exchange which in turn has limited possibilities for investment. By having 53% of the ASX across two sectors, the ASX is susceptible to market swings on the basis of the activity within these two sectors. Furthermore by having the top 10 companies representing 46% of the ASX, when these companies don’t perform as well as anticipated this has a dramatic effect across the whole ASX.

Healthcare and Information Technology are currently two of the largest growing industries across the world. Having exposure in an investment portfolio to these industries is imperative to a well balanced portfolio. Companies like Apple, Google and Facebook are just a few.

Investing in International Shares is perhaps easier than what some people may think, and there are ways that we can invest in International Shares via investments listed on our home exchange, the ASX.
If you would like further information about how we can assist you in creating a well balanced, considered investment portfolio with some international exposure, contact us at Quest Advisory Group on 1300 120 455.

Quest Advisory Group is a Perth based financial planning firm. We are holistic in our financial planning and can assist with all your needs from budgeting through to investment portfolios and personal protection insurances.

For more information, please contact us on 1300 120 455

 

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