The benefit of reduced portfolio risk from foreign currency exposure has helped increase interest in global equity investment, according to JBWere.
Foreign currencies give the benefit of diversification and may appreciate relative to the Australian dollar when domestic equities are performing poorly.
"Certainly we are noticing quite a bit of enthusiasm to gain more exposure to global equities. We're seeing quite good flows there," JBWere director of global investments Andrew Hudson told InvestorDaily.
"I think partly that is the dollar. For a while people have been a little gum-shy of the dollar. If you got into foreign currency assets in 2000 it hasn't been a pretty time for you.
"I think a lot of people now are realising that [local] currency has probably got a lot more potential downside than potential upside. But also people are just appreciating the diversification benefits as well," he said.
Mr Hudson said that although JBWere is cautious of fixed interest markets and equities chased due to their yield, he sees a shift to global equities which are growth-focused rather than income-focused.
"I think we will [see an increase in allocation] as some of the economic uncertainty is behind us. Gradually, over time, as the outlook starts to improve in the second half of the year we anticipate that improvement and [more] allocation," he said.
Mr Hudson recommends that investors allocate between 10 and 40 per cent of a portfolio to global equities through direct equities, managed funds or exchange traded funds (ETFs).
Currency can be left hedged or unhedged. If global assets are a small portion of a portfolio there will be compelling diversification benefits from foreign currency, while those with a large allocation to international assets, hedging a portion of currency may be most appropriate, he said.
