Investment opportunities offshore




	Investment opportunities offshore December 11, 2000 Investors who have long-term horizons and wish to diversify their portfolios should consider investing in international shares. These are particularly appropriate for people who are not seeking predominantly an income return, and for those with a focus on capital growth, particularly wealth accumulators. An investment in international shares allows investors to take advantage of the global investment opportunities available and made attractive by the globalisation trend-taking place. Four main factors have contributed to the greater use of international shares as an asset class: The deregulation of the world's financial system and markets, which has reduced barriers to investment; Improved information technology, which has enabled investors to analyse investments in both domestic and international markets; Improved global communications technology which has made the international transfer of capital faster; The lower inflationary environment and increased emphasis on self-funded retirement has increased the relative attractiveness and demand for sharemarket securities worldwide. International shares also provide access to more investment opportunities than the comparatively limited choice existing on the Australian sharemarket. They provide access to industries in which Australia does not have competitive advantage, such as aerospace, technology and pharmaceutical sectors. The shares are useful in reducing country-specific risk. Investing solely in Australian shares leaves an investor fully exposed to the fluctuations of the Australian economy and trade patterns, whereas going offshore allows investment in a broad range of economies and share markets. International shares also act to reduce volatility when used in combination with other asset classes, such as Australian equities. This is because Australian and international share markets can move in different directions at different times. A mix of 50 per cent international and Australian shares has historically given the most risk-efficient total returns for a two-asset portfolio. However investors should be guided by their individual asset allocations, and risk profile specific to their circumstances as these take more than one asset and other objectives of the investor into account. By John Cunniffe * This information is of a general nature only and you should consult your local RetireInvest adviser for specific advice. John Cunniffe is an authorised representative of RetireInvest Pty Limited (ACN 001 774 125), a licensed dealer in securities and a registered life insurance broker.