Shares are one of the major asset classes and can be broadly categorised into Australian and international shares.
Investing in international shares provides investors with a part ownership in the company, entitling the shareholder to a portion of the company’s profits through dividends.
Investors may also receive capital gains if the shares are sold for a profit.
Diversify your investment portfolio
The Australian sharemarket only represents around 2% of the total capitalisation of world equity markets. Investing in international shares offers further diversification to your investment portfolio. For example, you can invest in internationally recognised brands such as Microsoft, Apple, Google, Proctor & Gamble, Coca Cola and Nestle.
Also, the Australian sharemarket is dominated by certain sectors including financial companies, industrials and resources. Sectors such as healthcare and information technology are underrepresented on the ASX, so to gain exposure to these sectors, investors generally need to invest in international shares. There are a number of ways to gain exposure to international shares.
Options include:
- investing directly through a broker (fees and brokerage are usually higher than purchasing Australian shares)
- investing in international options through a managed fund
- investing in an LIC or ETF with international exposure.
Emerging markets
Investing in international shares also allows investors to take advantage of the benefits of investing in emerging markets in Asia and South America including China, India, and Brazil. These emerging economies have recently outperformed sharemarkets in developed economies such as the US and European countries.
You can gain access to emerging markets through listed funds such as the Asian Masters Fund.
Contact Dixon Advisory about investing.