Persistent inflation is eroding real returns from cash and fixed-income investments, leading Australian investors to explore overseas markets for income and growth, according to fund manager GSFM. While the domestic market remains a favourite, global equities offer diversification and access to dividend-paying companies in sectors underrepresented locally, such as technology, healthcare, and consumer staples.
GSFM chief executive Damien McIntyre stated that diversifying investments across different geographical regions and sectors reduces the risk associated with downturns in specific countries or industries. Dividends have historically been a reliable driver of equity returns, as demonstrated by the S&P 500 Index, which has shown positive dividend contributions in every 10-year period since the 1930s.
“Equities have a long-standing track record as the most effective vehicle for this growth,” McIntyre said. “Investors profit from equities in two ways: through rising share prices and regular dividend payments.” GSFM is a fund manager that provides investment solutions and partners with investment managers, offering Australians access to a range of asset classes and strategies. They aim to deliver consistent, long-term investment performance for their clients.
Global companies with robust free cash flow, including US dividend aristocrats, now provide both yield and capital appreciation, allowing investors to capture structural growth without sacrificing income. McIntyre added that unlike cash and bond holdings, which struggle to protect capital against rising inflation, equities can pass higher costs onto consumers, preserving real returns.
