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Reduction in Aussie investor home bias
Despite the Australia's reasonably robust domestic market there has been a gentle shift and reduction in home bias investments, a major custodian believes.
With the increase of wealth creation outpacing the development and growth of counter markets, Northern Trust's chief executive of asset management for Europe, Middle East, Africa, and Asia Pacific, Wayne Bowers, said Australians should be thinking about whether they want to reinvest into the domestic market or to increase diversification outside the country.
"Australians can look at more diversification outside the domestic market but not at the expense of the domestic market – you can keep your allocations steady but in nominal terms put more money outside the domestic market," Bowers told Super Review.
Bowers said there has been a push and pull between developed and emerging markets where although Australian growth has benefited from emerging markets there has been a slowdown in their investments.
"There has been an improvement in developed markets and if Australian companies are able to ensure that they're switching and keeping up with demand from developed economies they will do alright," he said.
"If they're totally relying on emerging economies they're not going to be OK."
Bowers said the fact that emerging economies have been slowing down means investors need to take ownership of their own domestic situation and that diversification of both assets and liabilities is important.
"It's really important to know where your revenue is from and where your liabilities are being derived from and whether you're able to mitigate that."
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