Investors begin exploring offshore options

Australian investors are expected to continue reducing their cash and property exposures this year in order to include offshore investment opportunities in their portfolios, according to Citi Australia.

“We’re seeing a decreasing of cash and property into other assets where there’s been opportunity,” Citi Australia head of wealth management David Zammit told selfmanagedsuper.

“Most Australian clients are generally heavily exposed to Australia, not just equities but the Australian dollar as well, so if you look at their portfolios compared to portfolios across the globe, we’re heavily overweight equities, and as there’s no real retail fixed income market in Australia so the lack of that fixed income component usually gets dispersed across cash, property and equities.

“What we’ve been seeing over the last two years is because the Australian market has been quite benign in terms of its performance and overseas markets have been very strong, particularly the United States, we’re starting to see investors explore what those overseas investment opportunities are.”

Zammit said when it came to Citi clients’ experience with their portfolios, 12 months ago they held decent exposures to Australian property and cash.

“But now we’re seeing a shift: money from those two pots has been looking for something else,” he revealed.

“So in a lot of cases, they’re looking at what those overseas opportunities look like. Is it overseas equity markets or is it overseas fixed income? Or is it local fixed income that they may not have been able to get access to in the retail space?”

During a recent media briefing, Citi Private Bank Asia-Pacific head of investment strategy Ken Peng listed financial technology, artificial intelligence, robotics and biotechnology as sectors to look at for offshore opportunities.

“We still expect high growth, higher rates and higher volatility this year,” Peng said.

“With those three things working together, equities will do well, but we believe in a balanced global portfolio.

“And within that portfolio, you need to have decent exposure to opportunities such as emerging markets, particularly Asia, and those technologies that are changing the way that we live and do business.”

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