The trend of diversifying into offshore opportunities will not manifest in sizeable allocations until investors, including SMSFs, became displeased with the performance of bank shares and the property market.
“The reality is people still have nothing [invested] offshore,” PM Capital chief investment officer and chairman Paul Moore told a media roundtable in Sydney today.
“The interesting thing about the banks is that people have had such a good experience and they don’t like to give something up that’s done well for them, so you need the first crack to occur before people really start thinking about putting money offshore.
“Until they have a bad experience, they probably won’t sell [their bank shares].
“But part of the point they’re missing is they’ve become so overweight that it’s just crazy not to be taking a few chips off the table, particularly when you can get a much better position offshore.”
Moore said the latest statistics revealed SMSFs still held less than 1 per cent of their assets offshore.
Commenting on whether SMSFs would lead the way in offshore investing, he said the move was slow across the board.
“I suspect that the SMSFs and investors who go through financial advisers probably have a bit more offshore [allocation] already, but it’s still quite small,” he said, adding there had been unlisted funds available to SMSFs for some time.
“What’s happened in Australia is a lot of investors have become a little disenchanted with the industry, plus when the banks and property are doing so well, it’s an easy one for them and simple to understand.
“The problem with international [investing] is that you do need someone else to facilitate it for you, so it has created a hurdle even if investors wanted to [invest], but they couldn’t do it.”
He said the overweight position in Australian banks and property was now at a point where it was grossly skewed.
“I suspect with the banks and property going so well, in a way it’s like why bother?” he said.
“You see this all the time – whenever the Australian dollar is at a high, people have most of their assets in Australia and whenever it’s at a low, it’s the other way around.”
He added the interest rate story was coming to an end and that over the next three to five years, the current trends, which were regarded as opportunities, would begin to inflect.
“But most people are going to [stick] to their recent experience and they will wait until it actually happens, which as an investor, is too late,” he said.
