Local investors ignore global assets at their peril

As part of the AFR’s 2024 wealth outlook series, journalist Alexandra Cain focusses on how investors who are mainly invested in the domestic market could be missing out on the benefits of diversification and exposure to international markets, as well as the potential for a slower growth environment going forward.

Talaria Co-CIO Hugh Selby-Smith believes that after a strong year so far, the outlook for global equities is challenging, but contains opportunities.

“The lagged impact of monetary policy means it’s typically 18 to 24 months before crucial parts of the economy such as unemployment rates and commercial and industrial loans are affected. We have just entered this phase, after a period of the fastest and tightest interest rate rises since the great inflation of the 1970s,” Hugh says.

Against this backdrop, Hugh says equities investors should avoid leverage and own more efficient, cheaper and less crowded stocks.

“With US stocks making up around 70 per cent of the global index, other regions currently offer more opportunities.”

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