MENU

This share could be the best way to get international share portfolio exposure

I often write about how Australians are far too invested in domestic-focused ASX businesses like Commonwealth Bank of Australia (ASX: CBA) and Telstra Corporation Ltd (ASX: TLS). In my mind, the best place to go for growth is overseas.

Australia only has around 2% of the listed shares in the world. That means we’re missing out on 98% if we’re not taking advantage of international shares. But, how are you supposed to know where to invest? There are thousands upon thousands of stock choices in North America, Asia and Europe.

You could just invest in the Vanguard MSCI Index International Shares ETF (ASX: VGS), which gives exposure to all the biggest businesses in the regions I mentioned. However, I like to try to beat the index.

That’s why I think MFF Capital Investments Ltd (ASX: MFF) is such a good option. It’s a listed investment company (LIC) run by one of the co-founders of Magellan Financial Group Ltd (ASX: MFG), Chris Mackay.

MFF Capital has been one of the best performing LICs over the past five years. According to Baillieu Holst Research, at the end of February 2018 MFF Capital was the only LIC to deliver total shareholder returns of above 20% per annum, at 20.3%, over the past five years.

Mr Mackay has more than $120 million of his family’s wealth invested in MFF Capital shares – he clearly believes in what he’s doing there.

MFF Capital mainly invests in American-listed companies, although there are other countries represented in its top holdings. Some of those holdings include Visa, MasterCard, Home Depot, Bank of America, Lowe’s, Alphabet (Google), Wells Fargo, Facebook and Lloyds Bank. Most of these companies generate revenue from all over the world.

It’s highly likely many of the above shares will do well over the coming years. The banks I mentioned should benefit in the short-term from the rising interest rates. The tech shares are growing strongly and are at reasonable valuations. Payments continue to shift to cashless transactions.

Foolish takeaway

I’m a fan of MFF Capital and would like to increase my holdings of it in time. At the current price of $2.47 it’s trading at a discount to its pre-tax NTA of $2.71 and a premium to its post-tax NTA of $2.26. I’d be happy to buy a parcel at the current price, but I’d want to be aware of how closely MFF Capital is linked to the strength of the US economy. President Trump is unpredictable.

If you like the idea of global growth, but want to invest in Australian companies, you should consider this top stock which is just expanding into Asia.

Breaking news: ASX companies set to raise dividends!

It's been a nail-biter of a reporting season here in the first half of 2018.

But the real action, in my opinion, is what companies are doing with dividends.

What does this mean for you? Well there is one stock I've found that could very well turn out to be THE best buy of 2018. And while there's no such thing as a 'sure thing' when it comes to investing - this ripper might come as close as I've ever seen.

Click here it's FREE!

Motley Fool contributor Tristan Harrison owns shares of Magellan Flagship Fund Ltd. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. 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 Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.