Global equities present opportunities for planners

5 May 2014

Over the past 12 months the global equities sector has seen the highest number of new product entrants since before the onset of the global financial crisis, which presents both opportunities and challenges for financial planners, according to Lonsec's Global Equities Sector Review.

The report reveals product choice in the global equities sector experienced strong growth and that choice had been buoyed by new entrants in the local market rather than an increase in available products from already established players.

Australia's $1.8 trillion asset pool and mandated growth through the superannuation guarantee scheme make Australia a particularly attractive market for offshore manufacturers, said Lonsec senior investment analyst Rui Fernandes.

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"Australia has a large and growing pool of assets and the recent rallies from major international bourses such as the S&P 500 and the Nikkei have attracted investors to the global equities story," said Fernandes.

He added there had also been a strong investment case for global equities in general due to opportunities from offshore equity markets, and given the purchasing power of the Australian dollar.

The Lonsec Review found that the notable increase in global equities — with greater choice and increased access to different products and markets — presented both opportunities and challenges for financial planners.

"More choice can lead to complications and there is an increased responsibility for financial planners to know which option is going to meet the needs of their clients in terms of individual risk appetite and desired investment outcomes," said Fernandes.

Despite the global equities investment landscape having become more complex, Fernandes maintains it now offers more interesting possibilities than at any time in the past.

"The growth in options across the sector coupled with some favourable tailwinds should reward planners who take a fresh look at investments in this space," he said.

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