3 financial companies to buy for international exposure

These three financial companies could be a good addition to any portfolio at the current prices.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Australia's largest financial companies have been pretty unimpressive over the last two years, companies like Commonwealth Bank of Australia (ASX: CBA), Suncorp Group Ltd (ASX: SUN) and Bendigo and Adelaide Bank Ltd (ASX: BEN) haven't grown much at all.

The Australian economy doesn't look like it's going to grow strongly any time soon. As our financial companies rely on growth in the economy to increase profits, it may be time to look further afield for growth.

Some Australian financial companies have expanded beyond these shores and those overseas markets may offer better growth in the next few years. Here are three financial companies to gain overseas exposure:

Macquarie Group Ltd (ASX: MQG)

Macquarie earns about 60% of its income from overseas, with a good presence in each continent. A much larger percentage of its income now comes from what Macquarie describes as 'annuity-style businesses'. Macquarie is focusing its efforts on being an asset management business.

Macquarie just unveiled an 18.75% increase to its half year dividend for the six months to 30 September 2016. It's trading at 13.2x FY17's estimated earnings (source: Commsec) and has a partially franked yield of 5.4%. This could be a good time to pick up some Macquarie shares.

BT Investment Management Ltd (ASX: BTT)

BT is mostly an equities manager, with 68% of its funds under management (FUM) being in equities. Around half of its FUM is managed by its UK-based JO Hambro asset management business, this gives BT more diversification than a domestic manager like Perpetual Limited (ASX: PPT).

BT increased its most recent interim dividend by 6%. It has a fully franked dividend yield of 4.06% and is trading at 16.1x FY17's estimated earnings. BT shares are trading 28% lower than their December 2015 high, partly due to the Brexit vote. At this price, it could be a good opportunity to buy.

Henderson Group plc (ASX: HGG)

Henderson is a fund manager based in the UK which, like BT, has been negatively affected by the recent Brexit vote. Henderson announced a few weeks ago that it plans to merge with US-based Janus Capital Group Inc to create an entity which would have total assets under management (AUM) of over US$320 billion.

This merger initially created a lot of excitement with the shares rising 11.5% the day after the announcement. However, the shares are now 2% lower than before the announcement. It's hard to know how the new combined entity will perform, but the expected synergies and benefits should be fairly substantial.

Now could be a good time to buy before the merger.

Foolish takeaway

All three of these managers have been successful at growing their funds under management, profits and dividends in recent years. As most of Australia's domestic-focused asset managers continue to be unimpressive, overseas ones could be the way to go.

I think all three should have reasonable long term performances, but I think Henderson looks the most compelling considering its share price reduction and how much benefit the potential merger could bring.

Motley Fool contributor Tristan Harrison doesn’t own shares in any companies mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »