AUSTRALIA - Australian superannuation funds bias towards domestic equities is set to come to an end, as changing market conditions force them to look internationally.
Kouryialas said Martin Currie was keen to gain exposure to any growth from the expected change.
He said: "One of the things a lot of people are doing work on now is asset allocation and, looking over the next three to five years, what is the call going to be between domestic exposure and international exposure.
"The solution is probably going to be that most funds would rather have a higher weighting to international equities than they would to domestic equities because the domestic market has done so well."
Kouryialas said many funds had made the decision late last year to move equity allocations into cash, as a result of the market difficulties.
He said: "We have a situation at the moment where a lot of people are sitting on cash and trying to work out what is their next step in getting into equity markets."
Russell Investments director of investment strategy Andrew Lill agreed much of that allocation was likely to be towards global equities.
He said while in the last five years funds had been rewarded handsomely by their allocation to domestic equities, the end of last year saw a change as Australian stocks were valued higher than their equivalent companies globally.
He said: "It was the first time in 30 years that that has been the case. Australian stocks normally trade at a discount to their global equivalent."
Lill said Russell had been advising clients to adopt an allocation of 40% domestic equities and 60% global equities, a move with would see them swing from the current average allocation of 60% domestic/40% global.
He said: "There is some evidence that assets are starting to be reallocated towards international assets. Some Australian super funds were selling out of Australian stocks at the point that the bear market really took hold and, in some cases, they have not yet redeployed that cash into international equities. But their long term view is that global equities are the place to be."
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