Investors' growing desire for offshore exposure is driving an increase in global equity products being issued by fund managers, Lonsec Research has found.
The Lonsec Global Equities Sector Review found that 25 new global equity products had been brought to market during the year to March 2016, a trend that shows “no immediate signs of abating”, according to Lonsec general manager of equities, Peter Green.
“There are a number of possible drivers of this activity, including attractive past returns from the sector, waning domestic market performance, and a general push for greater portfolio diversification,” he said.
Lonsec noted that investors are struggling to meet return targets in the current low-growth, low-yield environment, and added that global equities may be seen as a way of diversifying a portfolio while simultaneously improving returns.
The research house also noted that growth equities were the best performing peer group within the study, returning -1.7 per cent for the year, with small cap equities performing the worst for the year at -6.4 per cent, though they “remained dominant” over three- and seven-year periods.
A significant proportion of growth products, 69 per cent, have also outperformed their benchmark over a one-year period, up from 50 per cent over seven years, and 75 per cent for both the three- and five-year periods.