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Fund managers ditch Australian stocks


Kate Wick

By Kate Wick

3 min read

Australian stocks are losing popularity as Aussie investors begin to look offshore for their investment funds and products.

Aidan Puddy, IFM Investors Global Head of Indexed Equities, addressed a growing offshore investment trend – and their part in assisting Australian investors in cracking into the global markets.

"There is a growing demand amongst Australian investors for offshore investment products, with the role of index equities and particularly better beta capability growing in funds allocation strategies," Puddy said.

IFM Investors is introducing a Global Index Equities capability that will help such investors realise their goals and access overseas markets.

There were a number of reasons behind the decision to launch the capability, including offering IFM Investors clients expanded investment opportunities. Eventually, the capability will extend to international investors, too.

Stock performance outside Australia

Australian Stock Exchange-listed (ASX) stock values were flat during August, according to an ASX release. This finding was based on the All Ordinaries Index. 

Other major markets saw contrasting fluxes. For instance, in the US stock values increased 3.8 percent over the same period, while markets in the UK and Germany saw rises of 1.3 percent and 0.7 percent, respectively.

Australian investors may turn to these markets in coming months in order to grow their wealth, whether for SMSF investments or otherwise.

The World Economic Forum recently released its Global Competitiveness Report 2014-2015, which placed the US' and Germany's economies in the top 10 in the world. The former came in at number three, while Germany was the fifth-most competitive economy.

The UK was further down the list, at number 10.

Other countries experienced drops in stock values, specifically Singapore (-1.4 percent), Japan (-1.3 percent) and Hong Kong (-0.1 percent), according to the ASX.

The Australian equity market's expected future volatility increased during August to 12.2 points, up from 10.4 points in July.

All these figures point toward investors looking beyond the horizon at offshore investment options.

What's happening domestically?

According to Business Insider, there is chatter about how Australian stocks will fare in the global environment.

A number of factors were cited as the reason for Macquarie Bank telling investors to sell Aussie stocks in its most recently Global Horizons report, from China's burgeoning strength in financial markets to Australia's downturn in growth. The high Australian dollar needs to drop in order to change the latter.

Craig James, CommSec Senior Analyst, told Sky News that dips in base metal, iron ore and oil prices have affected the nation's stock market.

There are plenty of investment options open – make sure you're up to date with the latest trends in order to make a sound decision.

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