In my opinion, every Australian investor should also increase their exposure to the international share market.
It’s certainly true that Australia and the ASX has had a strong run over the past 25 years without a recession, although the GFC wasn’t exactly fun.
Australia’s largest large caps like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), BHP Group Ltd (ASX: BHP) and Wesfarmers Ltd (ASX: WES) have grown nicely over the past three decades. But, in my opinion, I think their growth rates will be lower from here.
The materials boom is unlikely to happen again to the same extent in China with growth shifting towards a services economy. The value of Australia’s housing is not likely to boom as strongly again this generation and immigration growth (as a percentage) is likely to slow.
I think the best way for Australian businesses to grow for the long-term is to expand overseas. It’s very risky for Australian businesses to go overseas, as Wesfarmers and National Australia Bank Ltd (ASX: NAB) have shown.
But, there are also some great success stories such as CSL Limited (ASX: CSL), Computershare Limited (ASX: CPU), Altium Limited (ASX: ALU), Webjet Limited (ASX: WEB) and Breville Group Ltd (ASX: BRG). But the number of successful ones is a small group.
With most Australian businesses missing out on global earnings, the ASX index as a whole is also too Australia-centric in my opinion. I think BetaShares Australia 200 ETF (ASX: A200) isn’t a bad option, but I think the other 98% of the global share market is worth exploring too.
I believe every Aussie’s portfolio needs a good percentage of the portfolio allocated to global shares.
Whether you do that through quality fund managers like Magellan Global Trust (ASX: MGG) and WAM Global Limited (ASX: WGB) or exchange-traded funds (ETFs) like Vanguard MSCI Index International Shares ETF (ASX: VGS) and iShares S&P 500 ETF (ASX: IVV), I think there are a lot of opportunities you could be missing out on by just sticking to individual ASX companies.
But, one of the best things about ASX shares is that you get franking credits with your dividends, which you don’t find anywhere else in the world. That’s why these top ASX shares could provide stronger shareholder returns once franking credits are included into the calculation.
For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked...
But knowing which blue chips to buy, and when, can be fraught with danger.
The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2019."
Each one pays a fully franked dividend. The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies move – we may be forced to remove this report.
Click here to claim your free report.
Motley Fool contributor Tristan Harrison owns shares of Altium, MAGLOBTRST UNITS, and WAMGLOBAL FPO. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia owns shares of Altium and National Australia Bank Limited. The Motley Fool Australia has recommended Computershare, Vanguard MSCI Index International Shares ETF, and Webjet Ltd. 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.