International market volatility sees advisers lean on local blue chip investments

According to AUSIEX’s last monthly analysis, financial advisers are looking to local assets for stability during these trying economic times, with the Commonwealth Bank of Australia (CBA) and Telstra coming in among the top 10 most purchased stocks for advised investors.

Others that made the list among this demographic were Wesfarmers, Brambles, BHP, Woolworths, Westpac, Fortescue, NextDC and Woodside.

Notably, while Woolworths was among the most purchased stocks for the month, its former subsidiary, Endeavour Group, was one of the most sold over the same period. Qantas was also among the most sold for this demographic.

Looking at non-advised investors, many of the same companies made their top 10 list; however, Pilbara Minerals, Appen, ZIP and ANZ Mineral Resources knocked a few off the ladder, including Westpac.

Speaking on the findings, AUSIEX national manager of strategic relationships Chris Hill said: “Banks were less favoured by direct investors than they have been previously.”

Comparatively, Hill noted that advised investors were leaning more towards such institutions, along with a “wider range of industrials”.

“Overall, financial advisers appeared to suggest their clients rely on a wide range of blue chip shares. This included expanding into data centres such as NextDC, which was among the top 10 bought stocks by advised investors,” Hill said.

A challenge that will be top of mind for many as 1 July approaches is the proposed Division 296 tax that would see superannuation balances valued over $3 million taxed at 30 per cent rather than the usual 15 per cent.

The analysis found that while advised high-net-worth (HNW) individuals with a self-managed super fund (SMSF) account over $3 million were largely favouring many of the same blue chip stocks, the Global X Physical Gold stock was among the most sold throughout May.

Fortescue and Pengana Private Equity Trust were also among the most sold during this period for the $3 million SMSF demographic.

As to what they were buying, AUSIEX found that these investors were also largely focusing on institutions, data centres and industrials, including CBA, Wesfarmers, Woodside, BHP, Brambles, Fortescue, Healius, Supply Network and NextDC.

A notable inclusion in this list, according to Hill, marked a slight shift in HNW investors’ approach to exchange-traded funds (ETFs).

“These HNWI SMSF investors also demonstrated a move away from index-weighted exchange-traded funds to an equal-weighted ETF in the VanEck Australian Equal Weight ETF,” he said.

Hill further highlighted an increasing trend in overseas investor activity in Australia, explaining that some large institutions, particularly from the US, were buying local stock, “believing the Australian market provides a somewhat ‘safe haven’ with respect to volatility in North American markets”.