An active ETF run by InvestSMART is changing its mandate to include exposure to global equities as it believes growth opportunities have become limited to find Australia.
From 1 July, InvestSMART’s Intelligent Investor Australian Equity Growth Fund – Active ETF will now be able to invest up to 30 per cent of its net asset value in global shares, primarily those in the US.
This will see the ETF change its name to Intelligent Investor Equity Growth Fund.
As these overseas stocks are already typically held in the firm’s Intelligent Investor Select Value Share Fund, InvestSMART said the change will mean little extra work for the management team with the benefit of improved returns and reduced risk.
Elaborating on the reasoning behind the change, head of research and portfolio management, Nathan Bell, said growth stocks in Australia are trading at “extraordinary valuations” compared to their overseas peers. This has led the ETF to suffer with underperformance, it said.
As of 30 April 2025, the ETF has lost 6 per cent over one year compared to gains of 13.3 per cent by the ASX 200.
Bell said: “Australia has a small number of excellent growth stocks with excellent prospects, such as REA Group and Technology One. But they trade at extraordinary valuations, way above businesses of similar quality listed overseas because they are so unique in Australia.
“The number of high-quality IPOs and listings is also falling, as more companies are opting to remain private to avoid the regulations, pressure and focus on short-term results suffered by listed businesses.”
As such, the decision to allow exposure to global stocks will increase the available investment universe for the ETF.
“Being able to select a small number of international stocks from our Select Value Share Fund increases the opportunity pool and allows these investments to compound at high rates over the long term with minimal turnover designed to avoid tax events that interrupt or slow the compounding of returns.
“This fund will remain a collection of Australia’s best growth stocks plus a handful of the world’s best opportunities … Being able to continue to perform at a high level is our primary consideration and this change, we believe, offers us the best chance of doing so.”
