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Dr. Mark Sinclair
Dr. Mark Sinclair, Mentor Education

Australian investors should allocate 90% of equity exposure abroad

27 August 2013

London-based investment house Bedlam Asset Management and leading Australian global equities
specialist PM Capital have commented that Europe was a much more sensible destination for overseas investment rather than China or South East Asian countries.

The two companies
have suggested that Australian investors should have 90% of equity portfolio overseas. While it has become apparent that Australian investors have begun to take advantage of the growth opportunities available across the globe, Bedlam managing director Jonathan Compton has said that, “while the long-term investment potential of South East Asia remained
attractive, Australia’s sensitivity to commodity demand meant that the region offered less diversification than investors realise.”

Compton has commented that European equities were “cheaper” and offered a “greatest diversification for Australian investors”. The Bedlam MD also said that “the correlation between the Australian and European markets were probably the lowest of anywhere in the world and regardless of where Australian equity investors go, they should, “consider allocating as much as 90% of their overall equity exposure overseas.”

Paul Moore PM Capital chairman and chief investment officer has also echoed Compton’s sentiment by stating that his firm is deep into the process of researching attractive stocks to invest in the region and believes that Europe could be the next big value theme to follow. “The vast majority, as much as 90%, of people’s investment assets are still in Australia. It doesn’t make sense” he said.