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Currency strength opens international equities door

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By Samantha Hodge
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3 minute read

Offshore equities are currently very attractive due to the strength of the Australian dollar.

The strong Australian dollar and low-priced equities in regions such as the US and Europe mean that Australian investors have an opportunity to invest in a growing market at low cost.

"The only way anyone will make money in this world is to buy good quality assets at a good price. And there you get the growth," Certitude Global Investments chief executive officer Craig Mowll told InvestorDaily.

"If you accumulate that with the fact that the Australian dollar is so high, people are realising that not only are they cheap, but they're really cheap for us because of the currency.

"The currency is a driving force and people should really be looking into that."

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Morningstar Australia co-head of Fund Research Tim Murphy told InvestorDaily that client portfolios tend to be overweight in Australian equities because there is a home bias which exists in most places.

Investing in international equities is very important for portfolio diversity which would lower risk of investors in volatile markets, he said.

"Australia is a very concentrated market, very reliant on China. If China falls over, Australian equities are going to be in a lot of trouble.

"We're not predicting that will happen necessarily but when you're building a portfolio you want to protect against a 'black swan' event, so to speak. So dulling that down and having broader diversification in international equities is important."

HSBC head of savings and investments Mike Danby told InvestorDaily that although investment overseas is very important, investors should not move away from Australian equities all together.

"I would say this is more a function of a collective diversification strategy out of cash rather than an absolute move away from Australian equities," he said.