Most portfolios have seen an uptake in allocations to international equities at the expense of Australian equities, so Money Management looked at the performance of both equity sectors using FE Analytics to see whether the grass really is greener on the other side.
Australian Prudential and Regulation Authority data tells us that as of June 2018, super funds with more than four members decreased allocations to Aussie equities to around 23 per cent, and international is up to 24 per cent, as opposed to September 2013 data which shows Aussie equities at 25 per cent and international at 17 per cent.
The move is mostly in response to investors searching for diversification in their portfolios, given Australia doesn’t offer much by way of tech stocks or consumer discretionary, and really only makes up two per cent of the entire global equity market.
But, experts will also say Australia is quite the honeypot for returns, using its minimal scrapes and bruises from the global financial crisis as an example. And, franking credits are still a pretty significant incentive to eat from the nest.
Looking at FE Analytics, global equities and Aussie equities don’t really seem to perform that differently, with global equities posting returns of 9.30 per cent over 10 years, 11.99 per cent over five years, 9.67 per cent over three years and 10.44 in the year to date.
Even the last six months, despite global trade tensions and...