Global shares

What are global shares? 

There are many kinds of asset classes to invest in – and global shares are often a common option found in an investment portfolio. Shares (known as equities) are units of ownership in a company that are generally issued by a company when it wants to raise money to help expand or fund its operations. Investments in global shares are investments in the shares of companies that operate around the world. Global shares can carry a higher level of risk compared to other asset classes like property, fixed interest or cash. But in exchange, they also have the potential to deliver higher returns over the long term. 

How can you access global shares? 

Global shares are traded on share markets – with about 60 operating across developed markets (more established countries such as the United States, England and Australia) and emerging markets (less developed countries such as Mexico, Greece and Thailand). Investors can own global shares directly, or access them through other means such as a managed fund or trust. A super fund may also have exposure to global shares as part of its strategy to help members grow their super balance.

Why invest in global shares? 

The Australian share market has historically delivered strong returns to investors. But because Australia represents only a small portion of companies listed on share markets, investors could miss out on a world of opportunities by restricting themselves to the Australian share market alone.

Investments in global shares have the potential to offer a number of benefits, including: 

More investment opportunities 

By investing in global shares, investors can gain access to a much broader range of companies – both established and emerging – and take advantage of growth opportunities that may not be available in smaller, singular share markets. 

Access to a wider range of industries worldwide 

Along with a broader range of companies comes a wider range of industries – for example, the ever-expanding information technology and healthcare sectors, which are (for example) comparatively smaller in Australia compared to other countries such as the United States.

Additional diversification in an investment portfolio

Diversifying your investments with global shares can help to manage risk and return in a portfolio. But to put this into perspective, an investment in a single company offers exposure to just that company alone, while an investment in a single-sector fund can offer exposure to companies in a single section of the share market, an investment in an Australian share fund can offer exposure to a range of companies within the broader Australian share market, and an investment in a global share fund can offer investors exposure to a much larger range of companies around the world – even if that is an investment in a single-sector global share fund.

How do global shares generate investment returns?

By owning shares in a company, you are entitled to a portion of the profits that the company makes – generally paid as dividends. The growth trend for shares has been higher over time, meaning shares have the potential to deliver higher investment returns over the long term. Returns may also come through the growth in the value of shares over time, known as capital growth.

How is Colonial First State invested in global shares?

Colonial First State offers more than 150 investment options, including a range of global share options. This also includes options formed through alliance partnerships with some of the world’s leading investment managers. The team has leveraged the knowledge and expertise of Baillie Gifford, a global investment management firm, to offer investors access to investment opportunities in global companies and sectors such as technology or telecommunications which have the potential to achieve growth over the long term. 

For more information, however, please contact our team or speak to your financial adviser.