Last year was a fantastic year to be invested offshore! The US stockmarket rose by almost 30%, the little Aussie battler, or dollar, fell by more than 15%, and so returns of 45% for investors were not uncommon. Two of the leading managed funds did even better – the Platinum International Fund did 47.2% after fees, the Magellan Global Fund even better, at 48.7% for the year.
Although history says it is extremely rare for one asset class to be the best performer two years in a row, the outlook for offshore investing is still reasonably favourable, with world economic growth trending up, and an expectation that the Aussie dollar has a little further to fall. Moreover, the long-term numbers suggest that an exposure to offshore equities should be a core part of most SMSF portfolios.
Of course, you can get exposure by buying individual shares directly – for example, Apple, Pfizer, GE, etc – however for most SMSFs, that proves to be too hard (and arguably, high risk), so the ‘managed’ option will suit. Let’s review the two main options – ETFs (exchange traded funds) or managed funds - and some individual funds within each category.