Key takeouts:

• Institutional investors have moved their gaze offshore and retail customers and SMSFs are following suit
• Direct international trading offers access to a range of unique diversification dimensions to boost portfolio returns, manage volatility risk and
• For advisers and their practices, integrating direct international investments in client portfolios can deliver a broad range of benefits but do come with specific consideration

Global investing over recent years has moved firmly into the mainstream. Australian investors - both institutional and retail - and their advisers are looking beyond domestic borders for diversification, growth, and opportunity.

With more than US$1200 trillion in global equity market capitalisation compared to roughly A$1.878 trillion on the ASX according to CEIC Data, the sheer scale and diversity of international markets alone make a compelling case for advisers and their clients.

Institutional investors have already moved offshore at scale. The Future Fund, for example, currently allocates around 32.70%¹ of its portfolio to international equities across both developed and emerging markets (20.3% in September 2022², while leading superannuation funds such as AustralianSuper hold between 30 and 40%³ of assets in offshore markets across its investment options. ASFA Superannuation Statistics for September 2025 (derived from APRA data), indicate listed international shares made up 30% of total super assets for funds with more than six members⁴.

A number of factors have accelerated the interest in international trading in recent times. Lower barriers to access, an increased number of platform providers and the proliferation of new and innovative ETFs and ETF strategies together with the mass appeal of investing in global names - from Apple, Nvidia and Microsoft to Novo Nordisk and ASML - have driven strong interest and flows to international markets, challenging the traditional ‘home bias’ of investors.

Equity market concentration is another significant factor. Australia’s top 10 stocks in the ASX200 index represent approximately 42% of total market capitalisation, and its top two sectors (financial services and materials) comprise 53% of total market capitalisation. By contrast, it is estimated that the top 10 stocks in the S&P500 (US) and FTSE100 (UK) make up 40% of the indices and their top two sectors approximately 34% and 38% respectively. For portfolios focussed on domestic holdings, in particular through market-cap-weight index funds, this can leave investors over-reliant on the performance of large-caps and key sectors which are also exposed to international macroeconomic shifts.

Expanding horizons: Why international stocks matter in a modern investment portfolio

From a portfolio-construction perspective, international equities can potentially play a critical role in delivering both diversification and return enhancement.

Considering Modern Portfolio Theory (MPT) - still widely used as a foundation for portfolio construction - blending asset classes and markets with less-than-perfect correlation reduces overall portfolio volatility while potentially increasing long-term returns. As we have observed above, Australian investors remain heavily concentrated in domestic equities. International markets can help mitigate that concentration by adding:

• Sector diversification – access to global leaders in technology, healthcare, consumer brands, and industrial innovation not widely represented on the ASX and Cboe. 
• Currency diversification – exposure to major global currencies such as USD, EUR, and JPY can act as a hedge against domestic economic volatility and reduce domestic purchasing-power risk. Modern platforms allow advisers to manage FX exposure through multi-currency wallets, enabling strategic decisions around currency conversion timing.
• Access to global leaders and structural growth opportunities – International markets offer direct access to some of the world’s most innovative and high-performing companies including Apple, Alphabet, Nvidia and Tesla. Through these companies, investors can participate in megatrends such as AI, quantum computing, clean energy, biotechnology, and digitisation that are driving value creation globally but are difficult to access in the domestic market. 
• Strategic diversification - International markets provide access to emerging investment themes—such as clean energy, AI, and biotech—as well as ESG-focused opportunities that may be limited in the domestic market. In addition, rapid product innovation in international markets provide advisers tactical tools they can’t access in local markets, with which to express market and /or stock views, or respond to volatility without needing complex derivatives infrastructure. For example, long and short, leveraged and single-stock ETFs now listed in the US and Europe allow tactical exposure to individual names while maintaining daily liquidity and transparency — instruments which may be used by sophisticated advisers to enhance client outcomes.

The global ETF market is broad and has substantial depth. According to UK based independent research and consultancy firm ETFGI, a record 1308⁵ new Exchange Traded Products (ETPs) were launched in the first half of 2025 globally (exceeding the previous record of 878 net new listings over the same period in the previous year). By comparison, according to Cboe Australia data⁶ there are only 440 funds currently available on local markets.

Risk factors: Why going global may be a hedge against domestic risk factors

Australian investors and their advisers may consider turning to international markets to seek diversification as a strategic response to mounting risk factors in the domestic economy. The ASX, as at 20 January 2026, is currently trading approximately 3% off record highs (set in October 2025), with price-to-earnings ratios elevated above long-term averages despite sluggish corporate earnings growth. The arguable disconnect between valuations and fundamentals raises concerns about the sustainability of gains and the potential for a broad market pull back. 

Compounding this is Australia's concentrated sector exposure, particularly to financials and resources (as mentioned above), which may leave portfolios vulnerable to commodity cycles and domestic credit conditions. 

By allocating capital to overseas markets, investors may be able to mitigate these risks through broader sector diversification, the ability to implement more complex and specific hedging strategies, access to economies with stronger growth trajectories or investment characteristics, and currency exposure that may buffer against local shocks. In this environment, international investing is not just about chasing returns and missing out on growth opportunities – but one of several ways investors may seek to manage portfolio risk and exposure to local market conditions. 

AUSIEX International Trading trends

AUSIEX data over the past 12 months since the launch of our International Markets offering shows that advisers’ international trading activity has grown steadily over the past year, with a clear tilt toward high-quality global brands, leading and emerging technology firms, and the use of ETF tools not available in domestic markets.

Top 10 International stocks by Traded Volume Calendar Year 2025

Source: AUSIEX (January 2026)

The data indicates both the growing comfort advisers have with investing in global markets and the desire to hold recognisable, world-class companies directly rather than solely through pooled vehicles such as ETFs.

Going direct: The case for direct international equities

While many advisers and investors seek international exposure through ASX and Cboe listed ETFs - over 50% of AUSIEX advised account ETF holdings are in international ETFs (January 2026) - direct investment in international equities offers numerous benefits.

Greater control and customisation - Direct investing can allow advisers to select specific companies, sectors or geographies based on independent research or client preferences to achieve more specific portfolio outcomes.

Cost efficiency - Locally-domiciled ETFs often come with management fees, currency hedging costs, and bid-ask spreads, or invest in other funds, which can add additional layers of fees and complexity.

Transparency and immediacy - Given direct equities trade on their home exchanges this provides real time price discovery, where ETFs may lag or trade at a premium or discount.

Hedging control - Advisers may have better control over whether to hedge or not, or to what extent, which may optimise portfolios for efficiency and return.

Avoiding ETF performance drag and liquidity issues - ETFs may be prone to rebalancing drag, tracking error or liquidity constraints in volatile markets. The lack of control may lead to winners being sold too early or laggards too late and may result in additional transaction costs and potential tax implications.

Navigating the complexities of global markets 

Some advisers and licensees may hesitate to trade international stocks directly due to legitimate concerns around regulatory obligations, platform limitations, and additional operational complexity. Navigating foreign tax rules, ensuring compliance with cross-border reporting standards, and managing custody arrangements can introduce risk and administrative burden. Currency exposure can also add another layer of volatility, and trading outside local market hours can also pose administrative challenges and complicate execution and market monitoring. So, direct international investing is not without its challenges. 

However, these are becoming more manageable with the emergence of new platform tools, and with careful selection of the right partner and understanding of their processes. Leading platforms, for example, now offer integrated solutions for custody, foreign exchange, and compliance, making direct access to global markets more practical. 

The adviser advantage: efficiency, relevance, and growth

It’s also important not to ignore the longer-term potential benefits to the practice.

Offering international trading is no longer just about portfolio diversification - it’s becoming a means to enhance client value and differentiate for advisory practices.
For advisers, offering direct international investing:

• Enhances client relationships - Enabling proactive conversations around global themes, currency dynamics, and sector opportunities, as well as more precise fitting of investor portfolios to individual values and preferences.
• Supporting next-generation engagement - According to the most recent ASX Investor Study from 2023⁷, younger ‘next generation’ investors had the highest allocation (25%) to direct international shares in their portfolios. This may present an opportunity to advisers to engage younger clients more effectively in their conversations by centring them around the companies and brands younger generations know about and which may be more aligned with their values.
• Integrated platforms deliver operational efficiency - Using a single platform provider for all trading (domestic, international, fixed income, ETFs, and ETOs) streamlines execution, administration, compliance, and reporting.
• Enhancing portfolio returns - Direct access to high profile technology ‘hyperscalers’ such as Nvidia and AMD and a broad investment menu of other growth-oriented stock and ETF opportunities in international markets may provide the opportunity for advisers to make tactical satellite investments within client portfolios to drive investment alpha.
• Practice differentiation and expanding the firm’s value proposition - Allowing advisers to compete effectively with digital brokers, other advisers, and global fintech platforms while maintaining the professionalism and control of a licensed environment.
• Potential revenue growth - Expanding your service offering into international equities can potentially unlock new revenue streams and deepen wallet share with existing clients.

The 360-degree portfolio

International equities can no longer be seen as the niche offering it once was - it’s now a logical extension of holistic portfolio management and a core component of the modern portfolio. 

As we have seen:

• Institutional investors have already moved offshore at scale.
• Retail and SMSF investors are following.
• Market infrastructure and technology now make international investing simple and efficient, removing many of the traditional barriers to access.

For advisers, direct international investing represents an opportunity to deliver better outcomes, engage a broader client base, and future-proof their practice. In a world where capital, innovation, and opportunity transcend borders, advisers who can connect their clients to global markets hold a clear strategic advantage. 
AUSIEX offers advisers a platform built for this new landscape: one that combines domestic and international equities, ETFs, ETOs, hybrids, fixed income and direct bonds into a single, comprehensive investment and portfolio administration ecosystem.

Ready to access a world of opportunity?

AUSIEX has the scale, technology, and expertise to make international trading straightforward for advisers and their clients.

Partnering with AUSIEX provides a turnkey international solution supported by a dedicated local relationship and support team and a full-service model designed to meet the specific and often more complex needs of investment advisers and their client investment portfolios.

Contact us today to learn how to activate international trading and start building truly diversified portfolios.

¹ Future Fund Portfolio Update, September 2025
² Future Fund Portfolio Update, September 2022
³ AustralianSuper Annual Report 2024
⁴ ASFA Superannuation Statistics September 2025
⁵ ETFGI Media Release July 2025
⁶ Cboe Australian Equities Funds Monthly Reports (December 2025)
⁷ ASX Australian Investor Study 2023

Important Information
The AUSIEX International Markets service (“International Markets” or “International Trading”) is an international share trading, nominee and custody service provided by Australian Investment Exchange Limited (AUSIEX) ABN 71 076 515 930, AFSL 241400, a wholly owned subsidiary of Nomura Research Institute, Ltd. (NRI). AUSIEX has appointed Saxo Bank A/S Company Reg. No: 15731249 as its International Custodian.