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Hub24 opens door to direct overseas equities

Adviser platform Hub24 has launched new functionality allowing direct access to individual international stocks, building on its suite of international managed portfolios that directly target SMSFs and the asset imbalance in their portfolios.

The offering gives advisers access to a wide range of individual securities in 14 markets across North America, Europe and Asia.

“Our recent white paper highlighted the issue of SMSFs’ limited exposure to overseas assets and how this was contradictory to the fundamental principles of diversification,” Hub24 managing director Andrew Alcock said.

“By providing access to international markets, Hub24 is helping advisers to service the needs of their current SMSF client base and opening up new client opportunities.”

While international managed portfolios opened up overseas markets and each opportunity they offered, it was still uncertain how much SMSFs would rebalance their portfolios in favour of overseas equities, the “International managed portfolios: A gateway for SMSFs to invest overseas” white paper commented.

“We also recognise that an increasing focus on the retirement outcomes for many investors may restrict future increases in exposure,” the paper, authored by Alcock, said.

“As such, for now it seems unlikely that the collective weighting of SMSFs to overseas equities will rise above 30 per cent of total assets – the average figure for the large balanced super portfolio over the next five years.

“However, it is plausible that the much lower average allocation to international equities, as evidenced by ATO data, will trend towards 15 per cent in the next five years, as SMSFs gain increasing awareness of greater choice on the direct side via investment structures such as international managed portfolios.”

The white paper further highlighted that the increasing development and adoption of international managed portfolios were revolutionising wealth management.

“This could result in a sizeable increase in SMSF allocations to overseas equities and, from an adviser’s perspective, provide an attractive offering to help target the lucrative unadvised DIY segment of the SMSF market,” it suggested.

“International managed portfolios remove the challenges which have impeded advisers from including directly owned international equities, particularly on behalf of SMSFs they are working with.”

According to ATO data at the end of December 2015, less than 1 per cent of SMSF assets were invested directly in overseas equities.

However, SMSF exposure to international assets on the Hub24 platform on average ranged from 17 per cent to 20 per cent, a factor that was linked to using a financial adviser.

Hub24 unveiled its suite of international managed portfolios at the end of last year.

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