This article lists the 20 most popular international shares invested in by SMSFs as of 30 June 2023. We are grateful to Class, an SMSF administration software company, who have provided the data used in this article.
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They’re some of the biggest and most dynamic companies in the world but there’s a catch – they’re all based overseas. Australians who want direct exposure to their growth need to invest in international shares listed on overseas stock exchanges.
There are good reasons for making the effort.
Gaining access to international markets provides opportunities that are not available in Australia, which represents less than 2% of global share market value.
Australian shares are heavily concentrated in the financial and resources sector, which means local investors are vulnerable to a downturn or negative sentiment in these industries. What’s more, some of the world’s most dynamic and profitable companies, and industries such as technology and pharmaceuticals, are not well represented on the ASX.
International shares also offer geographic diversity. If the Australian market is underperforming, your international shares may provide a buffer to your local equities.
In the year to 30 June 2024, Australian shares performed well (up 7.8%, or 12.1% including dividends) but international shares did even better, with a stellar return of 21.5% led by the booming tech sector.
There is, however, the added complexity of currency risk when you invest in international shares. The return on your investments can be influenced negatively (and positively) by the value of the Australian dollar to the currency of the overseas assets you invest in. That said, the Aussie dollar finished 2023–24 up only slightly, with plenty of volatility along the way.
Investors with a relatively small amount of money to invest overseas, or who lack the time or confidence to invest directly, generally opt to invest in international shares via a managed fund or exchange-traded fund (ETF) for low-cost instant diversification.
But increasing numbers of SMSFs with sufficient funds to build a diversified international portfolio of shares, or the conviction to select certain stocks, are choosing to invest directly.
