It’s the difference that makes the difference
At the core of global share investing is the difference between regions, countries and companies. By investing in companies from across the globe you get access to a whole range of valuable differences:
- Different patterns of return
Companies from different regions generate different rate of return in different ways. Australian companies tend to pay higher dividends than global shares. That can be attractive to those chasing income but may not be the best approach if you want long-term capital growth. Because global companies pay lower dividends (in general) they can invest more back into the business, underpinning longer-term revenue growth.
- Strengths in different sectors
As Garry explains in his video (watch now), different investment regions are dominant in different sectors. Europe is strong in fashion and autos, the US in tech, Japan in consumer appliances. Global share investing gives you exposure to all those strengths, but you still need deep research and analysis to find the best companies in each region and sector.
Global diversification also allows you to benefit from changes in those regional strengths. Fifty years ago, the idea that Made in Japan would be a watchword for quality control would have been laughable. Just 20 years ago, China was growing on the back of cheap labour. Today, China’s digital companies – Weibo, Tencent, Vipshop and more, rival the American giants in their growth rates and profitability.
- Investing, Global Style
Different regions have unique business cultures and regulatory structures that affect how you rate and value companies. In some parts of Asia, the payoff for less-than-perfect disclosure is that you can find undervalued gems – if you do enough deep, cautious analysis of your own. That’s less true in America where the size of the analyst community makes it harder to find information that’s not already “in-the-price”.
Finding the value in difference
Navigating the pros and cons of different investment regions is what Garry Laurence and his team do every day. The secret to turning that analysis into returns for investors lies in the underlying focus on individual businesses.
For Perpetual, regional differences do matter. But those differences are built into analysis at the company level. The focus is always on finding high quality, undervalued businesses, wherever they are in the world and pooling them into a portfolio that makes a real difference to investors.
Find out about the potential returns from investment opportunities unconstrained by borders.
