Hi Tony. Thanks for your question. As you know investing in the Australian stockmarket represents less than 3% of world markets with a high concentration in banks and mining so investing in the international arena provides diversification, access to a broader range of sectors and potentially some of the world’s largest companies and allows you to take advantage of various economic conditions/cycles. These days when you do your banking online you will see that you can access international shares. Whilst easy (DIY) and inexpensive there are numerous stocks from around the world to choose from. For your information it is the Morgan Stanley Capital Index (MSCI) that is made up of 23 country (stock exchanges) and some 1500 companies. How would you know which stocks are better suited to you and from which country? There are stockbrokers that could provide an element of expertise for a brokerage fee however in our experience the best way to access international investment is through Managed Funds (active or passive investment) and in more recent times Exchange Traded Funds (ETFs - passive investment).
A Managed Fund is a unitised investment, you buy and sell units from the manager and the investment cannot be traded on the stockmarket. Assets are managed by leading investment managers who have global reach and resources and the experience and expertise in their specific area of investment. With Managed Funds that invest in international shares there are different styles, themes of management and different geographic exposure. They are active international managers that try and outperform the relevant region/country index or the world index (MSCI) and then there are inactive or passive managers that just mimic the index (index managers). The fees for index managers are usually substantially cheaper (no active management). Performance over the long term has been consistent. ETFs specifically are also a low cost way to gain exposure to the international index and can be bought and sold like shares, be accessed online, through your broker/financial adviser.
By Michelle Tate-Lovery CFP®