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Large-cap managers targeting offshore growth

Tim Stewart
— 1 minute read

Large-cap Australian equity managers are positioning their portfolios to capture global growth, with 30 per cent of their overweight position revenues coming from the US, says a new report by Zenith Investment Partners.

The Zenith 2015 Australian Large Companies Sector Review found that the top 10 overweight positions from Zenith-rated managers (as of 30 April 2015) saw 30 per cent of their revenues come from the US.

Twenty per cent of the top overweight position revenue came from Asia Pacific, 19 per cent came from Europe and only 18 per cent came from Australia.

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This is in stark contrast to the S&P/ASX 300 index as a whole, which sees 60 per cent of its revenues come from within Australia.

Zenith lead analyst on the review Quan Nguyen said the average Australia-listed company doesn't just do business in Australia.

"Where a company is listed versus where a company does business and generates revenues is a concept that the majority of Australian equities managers are fully embracing, particularly given Australian economic growth has been relatively benign," Mr Nguyen said.

"Active Australian equity managers are clearly positioning their portfolios to capture economic growth offshore.

"While our source of revenue analysis for Australian equities companies certainly points to diversification benefits, we aren’t suggesting that Australian equities can replace an investor’s direct exposure to global equities.

"Zenith continues to advocate that a well-diversified equities component in portfolios includes both Australian and global equities.

"As part of the review, Zenith surveyed all managers on forward looking prospects. In aggregate, the Australian equities managers we reviewed identified the S&P/ASX 51 to 100 segment of the market as being the most attractive for the next 12 months," Mr Nguyen said.

The S&P/ASX 300 Accumulation Index returned 10.2 per cent for the 12 months ending 30 April 2015, with the average manager on Zenith's approved product list outperforming the index by approximately 0.3 per cent, net of fees.

 

Large-cap managers targeting offshore growth
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