SMSF trustees need to look beyond the domestic equity market to seize investment opportunities arising from worldwide trends, an international fund manager has said.
During a presentation at the Australian Shareholders’ Association Conference held in Sydney in May, K2 Asset Management head of distribution Andrew Hall used the development of the internet and the multifaceted components associated with it as an example of investment opportunities Australian listed companies could not provide.
“Internet connectivity is now about speed. Everybody wants speed,” Hall said.
“In the US it was about the cables that were already laid for cable TV channelling the internet down that means.
“So there were opportunities to invest in companies in the US like Comcast that already had the infrastructure in place to provide cable TV and then all of a sudden there was an opportunity for them to provide the internet into houses that were already connected.”
He cited the types of devices providing access to the internet as another area of opportunity for SMSF investors.
“The manufacturers of the semiconductors and the parts that go into say a smartphone, so not just the phone, but the componentry providers [can be good companies in which to invest].”
According to Hall, a further area presenting investment opportunities for SMSFs was data producing.
“All this data collection, you’re leaving footprints everywhere, and people will buy this information so they can direct advertising towards what people are doing,” he explained.
“The internet is clearly not going away and this digital technology is here to stay.
“So it presents a massive opportunity which is really hard to invest in if you’re looking at purely Australia.”
In addition to unlocking those types of investments, an allocation to overseas equity markets also had the benefit of diversification away from local banking and mining stocks SMSFs typically held, he said.