This article includes the 20 most popular international shares invested in by SMSFs as at 31 March 2019. This article uses data supplied by Class, an SMSF administration software company, and is based on a statistical analysis of the 160,000+ SMSFs administered using Class software. We thank Class for giving SuperGuide access to such valuable data.
- SMSF investment: 20 most popular Australian shares
- SMSF investment: 20 most popular managed funds
- SMSF investment: 20 most popular ETFs
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 to share in their growth need to invest in international shares listed on overseas stock exchanges.
Gaining access to international markets provides opportunities that are not available in Australia, a country which represents less than 2% of global sharemarket 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 economy is weak while other national economies are doing better, your international shares will provide a buffer to your local equities.
Of course, international shares are subject to currency risk. The return on your investments can be influenced negatively (and positively) by the value of the Australian dollar versus the currency of the overseas assets you invest in. There may also be less research available on international shares than there is on local companies.
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 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 in international shares.
20 most popular international shares invested in by SMSFs
We live in a world where most of us carry a mobile, work on a laptop or tablet, shop online, tap and pay, and spend hours each day checking our social media or googling information. So it will come as no surprise that technology giants dominate the top 20 direct international share holdings.
In fact, tech companies made up 60% of the top 20 as at 31 March 2019, which in turn represents 27.7% of total SMSF investments in direct international shares. The top 20 list was led by – you guessed it – Google (listed as Alphabet), Apple, Amazon, Microsoft, Facebook and Alibaba (the e-commerce giant known as the Chinese Amazon).
Tencent, China’s second most valuable company most famous for its WeChat messaging and social media app, appears to have turned the corner after the Chinese government ended its ban on some of the group’s most popular smartphone games in December. Tencent’s profit for the first quarter of 2019 was a record US$4 billion, higher than expected after its slowest annual profit growth in 13 years in 2018.
As at March 31, Tencent was held by 4.7% of SMSFs with direct international shares, up from 4.0% in December when it entered the top 20 list. Tencent is Asia’s largest tech company and is listed on the Hong Kong stock exchange.
Chart: Tencent share price (October 2018 to March 2019)
Source: Yahoo Finance
Payment companies including PayPal, Visa, Mastercard and Wells Fargo are also in the top 20.
Three companies are new to the top 20 list. Coffee chain Starbucks, US online homewares retailer Home Depot and financial services group JPMorgan Chase. Starbucks debuted at number 12 on the list as its share price jumped 53% from its June 2018 low to the end of March. The company announced higher than expected earnings for the March 2019 quarter and raised its 2019 profit guidance.
Chart: Starbucks share price (October 2018 to March 2019)
Source: Yahoo Finance
20 most popular international shares invested in by SMSFs.
|Rank||Security Code||Exchange||Description||% of Funds|
with Int’l Shares
that hold this
|% of total SMSF|
|1||GOOG(L)#||NASDAQ||Alphabet Inc – Class C (A) Shares combined||19.20%||3.80%|
|6||BABA||NYSE||Alibaba Grp Shs Sponsored American Deposit Share Repr 1 Sh||9.40%||1.00%|
|8||PYPL||NASDAQ||PayPal Holdings Inc||5.90%||0.90%|
|9||BRK.A/B#||NYSE||Berkshire Hathaway Inc. Classes A & B combined||5.70%||4.30%|
|11||JNJ||NYSE||Johnson & Johnson||5.00%||0.70%|
|13||700||SEHK||Tencent Holdings Ltd.||4.70%||0.60%|
|14||BAC||NYSE||Bank of America Corp||4.50%||0.60%|
|15||WFC||NYSE||Wells Fargo & Co||4.10%||0.50%|
|16||LLOY||LON||Lloyds Banking Group PLC||3.80%||0.60%|
|18||HD||NYSE||Home Depot Inc||3.40%||0.30%|
|19||JPM||NYSE||JPMorgan Chase & Co||3.40%||0.60%|
|20||DIS||NYSE||Walt Disney Company||3.40%||0.30%|
Source: Class (class.com.au). Data as at 31 March 2019
Learn more about SMSF investment in the following SuperGuide articles:
- How to invest in infrastructure through an SMSF
- ETFs: How do I use them and what do they cost?
- SMSF guide to hedging
- SMSF investment rules: Collectables and personal use assets
- SMSFs and property: A Super Guide
- The definitive SMSF guide to franked dividends
- What are the SMSF borrowing rules?
- SMSF investment rules: What every trustee should know
- How to create an SMSF investment strategy (including examples)
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