Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 261

Finding opportunities in listed global funds

Much has been written about the fact that Australian retail investors’ portfolios are heavily weighted to Australian equities, despite the domestic market representing a small proportion of global equity markets. It is not difficult to understand the reasons for this home bias given the benefits of the dividend franking system in Australia, the difficulties of direct investing in foreign markets and currency risks associated with offshore investing. The universe of global equity investment opportunities is vast, but researching and selecting the right shares to invest in is a challenging task for the average investor.

Plenty of ETFs and LICs on the ASX

There are numerous indirect options for Australian investors to gain international exposure, in both managed and passive form. Many Exchange Traded Funds (ETFs) offer global exposures, usually as ‘passive’ investments designed to track the performance of a certain index, but increasingly in 'active' form. There are also a large number of unlisted global managed funds.

For investors looking for actively-managed international equity exposure with the benefits of ASX market liquidity, there are an increasing number of listed investment companies (LIC), listed investment trusts (LIT) and active ETF options. Our tables (annexed at the end, or see the full monthly report) list the 27 LICs and LITs which invest solely in international equities (excludes those with blended portfolios of Australian and international shares), and the 18 active ETFs with international share strategies. We do not cover or provide ratings for any of these Active ETFs, so our data is for information only.

In our tables, we split the 27 international-focused LICs and LITs into different categories according to their investment strategies. There are 13 LICs/LITs that have diversified global portfolios, five with emerging markets exposure and seven with specialist strategies. There are also two Watermark absolute return funds that are predominantly invested in global equities.

The majority of the international LICs/LITs are trading at discounts to pre-tax NTA and at the end of May 2018, the average discount was 7.4%. Platinum Capital (ASX:PMC) was the only LIC trading at a significant premium of 14.0%. It is unclear why so many of the international LICs/LITs are trading at discounts and, in our view, this provides a good opportunity for investors to add international exposure to their portfolios.

Recommendations on nine LICs/LICs

IIR covers nine of the 27 international LICs/LITs at present with more to come. The table below lists these nine entities showing premiums and discounts at the end of May 2018. We have also added WAM Global, which listed at the end of June.

Click to enlarge

For those LICs/LITs with options on issue, we have calculated an options-diluted premium or discount. There are only two LICs/LITs trading at small premiums. We view all the LICs/LITs on the list as suitable investments at current prices, although those at larger discounts represent better value. In our May 2018 LMI Monthly Update we wrote about WCM Global Growth (ASX:WQG) (formerly Contango Global Growth) which we believe represents good value at a 10.6% discount to option diluted pre-tax NTA (the discount has narrowed since the end of May).

For investors looking for a well-diversified portfolio of international equities, it is hard to go past Future Generation Global Investment Company (ASX:FGG), a fund of funds LIC. It invests in a portfolio of 15 funds managed by Australian fund managers who forgo management fees so that the LIC can make a 1% annual donation to charities. The charity donation is less than the fees that the managers would normally charge, with the difference being to benefit of investors in FGG. The managers also forgo performance fees, also to the benefit of investors in FGG. The portfolio is well-spread across geographic regions and has a mix of large, mid and small cap exposures. FGG shares were trading close to pre-tax NTA at the end of May.

Magellan Global Trust (ASX:MGG) is the largest of the global listed managed investments. It primarily invests in large international companies and has a high weighting in US technology companies. Pengana International Equities (ASX:PIA), Ellerston Global Investments (ASX:EGI) and the newly listed WAM Global (ASX:WGB) all invest in mid and small-cap shares, providing a point of differentiation. PIA also offers the benefit of a high, fully franked dividend yield.

This article provides a brief overview of the international LMIs (LICs) that we cover. For more details we encourage investors to read the individual two-page profiles in our Listed Managed Investments Quarterly Reviews.

 

Peter Rae is Supervisory Analyst at Independent Investment Research. This article is general information and does not consider the circumstances of any individual.

 

LICs & LITs which invest solely in international equities

Active ETFs with International share and security strategies

 

RELATED ARTICLES

Four ways to invest in the same fund and save money

ETFs are the Marvel of listed galaxies, even with star WAR

Latest LIC and ETF updates

banner

Most viewed in recent weeks

Raising the GST to 15%

Treasurer Jim Chalmers aims to tackle tax reform but faces challenges. Previous reviews struggled due to political sensitivities, highlighting the need for comprehensive and politically feasible change.

7 examples of how the new super tax will be calculated

You've no doubt heard about Division 296. These case studies show what people at various levels above the $3 million threshold might need to pay the ATO, with examples ranging from under $500 to more than $35,000.

Are franking credits hurting Australia’s economy?

Business investment and per capita GDP have languished over the past decade and the Labor Government is conducting inquiries to find out why. Franking credits should be part of the debate about our stalling economy.

Here's what should replace the $3 million super tax

With Div. 296 looming, is there a smarter way to tax superannuation? This proposes a fairer, income-linked alternative that respects compounding, ensures predictability, and avoids taxing unrealised capital gains. 

The rubbery numbers behind super tax concessions

In selling the super tax, Labor has repeated Treasury claims of there being $50 billion in super tax concessions annually, mostly flowing to high-income earners. This figure is vastly overstated.

9 winning investment strategies

There are many ways to invest in stocks, but some strategies are more effective than others. Here are nine tried and tested investment approaches - choosing one of these can improve your chances of reaching your financial goals.

Latest Updates

Taxation

100 Aussies: seven charts on who earns, pays, and owns

The Labor government is talking up tax reform to lift Australia’s ailing economic growth. Before any changes are made, it’s important to know who pays tax, who owns assets, and how much people have in their super for retirement.

7 key charts on the state of the Australian property market

The Australian property market stirs fierce debate - often bullish optimism versus crash predictions. But beyond the noise, seven charts reveal what's really driving prices and the outlook for residential real estate.

A simple alternative to the $3 million super tax

Division 296 aims to introduce improved fairness into the superannuation system, yet is overly complex. This scours the world for better ideas and suggests a simpler alternative which can achieve the same goals.

CBA and the index conundrum for super funds

After the hyperbolic rise in CBA shares, super funds are floating the idea of carving out the weightings of ASX bank securities and indexing them within their portfolios. This looks at why that might be a big error.

Strategy

10 policies to drive Australian productivity higher

Here's a comprehensive list of proposed reforms to fix Australia's stagnating economy, including introducing a flat income tax rate, reducing migration, and making childcare tax-deductible.

Interviews

Where to find big winners in Asia

As more money looks for a home outside the US, Asia may soon get some love. Fidelity's Anthony Srom outlines the best places in Asia to invest, including in Chinese consumer names, Indian financials, and Thailand.

Investment strategies

We have trouble understanding the time value of money

We overvalue the present and underestimate the future - it’s a cognitive glitch called hyperbolic discounting. It affects savings, spending, and loans, and it's more common - and costly - than we think. 

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.