Australian investors continue to harbour a bias toward domestic equities, according to new research from Morningstar.
Morningstar’s Global Equity Sector report found that despite the opportunities found in equity markets around the globe, local investors still have a preference for Australian equities.
“What we find anecdotally is that on average Australian investors tend to have a home bias in their portfolios,” Morningstar research analyst Kathryn Young told InvestorDaily.
“Australia is not alone in this, but it has been particularly distinct here as Australian equities and the Australian dollar have been so strong over the past 10 to 15 years.
“It’s really helped to solidify in investors’ minds that Australia is a place to invest.”
The research suggests, however, that the global shares asset class will provide investors with greater exposure to stocks that will participate in the next phase of global capital growth.
With the mining boom predicted to peak and the Australian dollar remaining high, Ms Young said that now is an opportune time for investors to look at global equities to diversify their portfolios.
“Research still indicates that despite the fact that the level of [equity] valuations globally is more elevated than it was six to eight months ago, there are still many total return opportunities available around the world,” Ms Young said.
“We think it’s important for investors to be more evenly balanced between Australian and global equities and now is actually a good time for investors to consider that, given the high Australian dollar and the fact that some of the major drivers of the Australian stock market may be diminishing.”
