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3 investment firms benefiting from overseas market exposure

The Australian share market had a decent year in 2017, rising around 7% in price terms and even more once you factor in dividends and franking credits. However, this return was much lower than the gains enjoyed by several major overseas markets.

Below are the 12-month returns for US, UK, German, Japanese, South Korean and Hong Kong indices.

  • S&P 500 up 22%
  • Nasdaq Composite up 31.5%
  • FTSE 250 up 15%
  • DAX up 15%
  • Nikkei 225 up 23%
  • KOSPI 200 up 25%
  • Hang Seng up 40%

While this is a simplistic comparison, there is no doubt equities in the United States and major European and Asian markets have outperformed Australia. Commentators point to synchronised global growth as a reason for higher overseas markets, and while Australia’s economy is growing in terms of GDP, it remains hampered by high household debt and low wage growth.

Should this global growth story continue to play out in 2018, I expect ASX-listed investment firms Platinum Asset Management Limited (ASX: PTM), Magellan Financial Group Ltd (ASX: MFG) and Macquarie Group Ltd (ASX: MQG) to benefit.

Platinum’s range of International, Japan, Asia and Europe funds have appreciated as much as 35% over the past year, recapturing investor attention. Since the end of the 2017 financial year, Platinum’s funds under management (FUM) rose 19% to $27 billion by the end of November.

After a disappointing 2016 which saw negative net fund flows, Platinum introduced new fee structures in 2017 and improved investment performance. The market recognised the firm’s turnaround and Platinum shares have risen 66% in the last six months.

Magellan is another investment firm with a stable of both ASX-listed and unlisted managed funds. It too had a strong year in terms of investment returns, averaging more than 20% across the board over the past twelve months.

Average FUM rose 16% to $45.7 billion in FY2017 and this allowed Magellan to record 15% growth in management and service fees over the same period. FUM continues to increase this financial year, with the latest figures tallying $58.6 billion as at 30 November. Magellan shares are now up 7% over the last three months.

Macquarie is a large global asset manager with more than $470 billion of assets under management as of 30 September. International income represented 62% of total income for the first half of FY2018, with significant growth in Macquarie’s annuity-style businesses.

Far more than just an equities fund manager, Macquarie also provides clients with access to a diverse range of products and services including real assets, fixed income, foreign exchange, commodities, corporate finance and retail banking.

Fuelled by expectations of higher earnings in FY2018 and the announcement of an on-market share buyback of up to $1 billion, Macquarie shares recently broke through the $100 for the first time and are up 11% since October.

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Motley Fool contributor Ian Crane has no financial interest in any company mentioned. The Motley Fool Australia owns shares of Platinum Investment Management Limited. 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.The Motley Fool Australia owns shares of Platinum Investment Management Limited. 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.

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