An overwhelming majority of advisers is expecting positive returns in international markets over the next 12 months, according to survey results from Zurich’s investment business in Australia.
The survey of more than 100 advisers also found that almost 70 per cent or respondents will increase their clients’ allocation to international equities in the next six to twelve months, and that 75 per cent of those will do this via managed funds.
Patrick Noble, senior investment strategist at Zurich Investments, believes the results are significant given the trend towards cash and direct local shares that has dominated investment behavior in the past several years.
“With the huge number of Australians facing retirement in the next few years, advisers need to find strategies that do not rely solely upon cash rates or a rise in local markets to provide income for the future. Importantly, they need to do this at a time when investor confidence remains subdued,” he said.
“We believe it is significant, therefore, that advisers are now turning their attention to international markets and that they recognise the value a specialised investment manager can deliver.”
The cosmopolitan Australian
According to the survey, the majority of advisers is expecting positive returns from international shares over the next 12 months, with 54 per cent expecting single-digit returns.
Just 3 per cent of respondents believed international shares would deliver negative returns. The results show a bias towards international shares over local ones when compared to a Zurich survey from June 2012.
Noble said the strong Australian dollar is almost certainly a factor in why international markets are more attractive but thinks it could also be about the increased familiarity Australian investors have with international companies and markets.
“According to the survey, almost 70 per cent of advisers believe the Australian dollar will be above or at parity with the US dollar over the next 12 months. A strong dollar is definitely beneficial, but Australians are also more familiar with both offshore markets and companies such as Google and eBay,” he said.
“Advisers know that staying in cash over the long run is not going to deliver the returns or income investors need for a comfortable retirement.”
