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Global equities open the door to so much more
BlueChip Communication recently held its inaugural ‘Asset Wars’ event, at which a panel of five financial services clients put the case for ‘their’ asset class before a group of media and industry peers, who voted for the ‘winner’ via the audience-fired ‘clapometer’. Here we give you a summary of each speaker’s case, beginning with the winner:
Grant Forster from Principal Global Investors (PGI), Global Equities, was quick to take his place at the lectern, dismissing the attraction of Aussie equities by asking the crowd to stand up if they had used Google that day, or had an Apple product either on their person or in their home.
With the entire room standing, Mr Forster asked why, when they were so connected to global companies, would they confine themselves to four banks, two grocers, two miners and a phone company?
“I can get you to retirement so much faster with global equities!” he declared.
With the crowd eating out of his hand, Mr Forster went on to back up his claims with some startling comparisons between Australian and global markets.
Technology is very attractive at the moment, yet it makes up less than 1% of the Australian index. In global indices it hovers around 13% and in PGI’s global equities fund, it is 17%. Healthcare as a sector is on the up and up, yet it represents just 4% of the index in Australia, compared with 11% overseas.
When it comes to being overweight however, the Australian index is, not surprisingly, heavily weighted to materials and energy, yet the strong run from materials and energy is very likely over.
Mr Forster then sought to cement his argument by appealing to the vanity of the audience members. He said that they looked to him like trend setters rather than trend followers and that he understood that they may not want to invest in Apple or Google for that reason. But what about the Taiwanese semiconductor company that supplies them? Why cut yourself off from that opportunity?
A core thrust of Grant’s argument? Australian equities are on the decline. Get out and get out now while the buying is good.
Just for good measure, Grant then laid out clearly his four reasons for backing global equities over their Aussie counterparts.
- Much better diversification
- Much higher exposure to sectors which are growing
- And perhaps most importantly, the global CEO of PGI, Jim McCaughan, had said so in the AFR the previous day.
In conclusion, Mr Forster went in for the kill, pulling out the big guns and citing the reason close to every holiday maker’s heart … the killer Aussie dollar.
He then posed the question: Why do you think you can’t move your trolley in LA airport for all the tracksuited Australians looking to spend their money at the outlets? Because there have been few times in our history when buying overseas manufactured assets have been so attractive.
Finally: the call to action. Overseas buying is cheap! And isn’t that what we are all trying to do? Buy low and sell high? Now is the time to buy low, according to Grant and PGI. Global equities offer so many more opportunities are they are about to take off, just as Aussie equities are on the wane.
Grant Forster is CEO of Principal Global Investors here in Australia. Principal is a diversified global asset manager which offers investors access to a range of asset types through its multi-boutiques strategy. That includes international equities, through a range of global equities funds.
