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I am wondering whether you would be inclined to invest money in a global fund or buy shares with global exposure? Could you also recommend any global equity funds or shares with global exposure and maybe suggest what percentage of a typical SMSF you would invest in such funds or shares?
A: Thanks for the question.
While there is always a debate about how much to allocate to overseas market, with an expectation of a falling AUD and recovering global economy, I think there is still some value in allocating money to these markets.
The standard portfolio allocation models have a lot higher weighting to overseas equities than we prefer for SMSFs, mainly because they don’t consider the tax advantages from franking credits. Accordingly, we typically recommend around 10% to 20% of your total fund rather than some models that are as high as 35%. Clearly, different funds have different needs to meet for their members and different expectations about risk and return – so there is no normal.
In terms of funds, James Dunn reviewed these a couple of months back – I have attached the link to his article.
The other easy way to invest is through Exchange Traded Funds. Barry Dunstan covered these in November – you can find the article here.
