NASDAQ up 30% in 2023 as ASX dawdles: Just one reason investors are looking overseas to diversify their portfolios
Aussie investors are increasingly looking beyond the ASX to diversify their investment portfolios, says Adam Smith, CEO of multi-asset online trading platform Saxo Australia.
Markets have been under pressure in 2023, with economic uncertainty stoked by higher interest rates and increasing geopolitical tensions.
“During Covid you could go and buy anything and make money, everyone was a trading hero, and we were all patting ourselves on the back,” Adam Smith says.
But markets don’t stay up forever. While some ASX investments have paid off handsomely in 2023, it has been tougher to make money. This is where diversification into booming overseas markets, like the NASDAQ, comes into play.
“We’ve seen less of a bias to ASX investing as people see the opportunities available in overseas markets. You only have to look at the big tech names in the US,” Smith says.
He says the NASDAQ composite index is up more than 30% year to date, while the ASX 200 is up just ~2%.
“The NASDAQ has performed well compared to a lot of other indices and that’s really down to the performance of the Microsofts, Apples, and Teslas of the world,” he says.
Smith says overseas markets such as the NASDAQ offer greater diversification for Australian investors.
“You want to also be diversified at an industry level,” he says.
“In Australia, we have superannuation accounts heavily invested in the ASX 200; if you look at the top 10, we’ve got four or five banks, three or four miners, a big retailer and Telstra,” he says.
“We don’t have a lot of tech names in the Aussie market, so you need to look overseas.”
And don’t forget about health, he says.
“Big pharma during Covid had a bit of a run but one of the most traded stocks by Saxo clients globally this year is Novo Nordisk with huge moves around Ozempic for weight loss.”
Saxo Australia has a financial services licence through the Australian Securities and Investments Commission (ASIC).
It is a subsidiary of Danish-headquartered business Saxo Bank, which was established more than 30 years ago by Kim Fournais, who is still the group’s CEO.
The company was an early player in providing internet brokerage and financial services to retail clients.
Saxo has operated in Australia since 2012. Smith says one of the differentiating points for Saxo Australia is its global view.
“If you’re a client of Saxo in Australia it’s as easy for you to invest in European, Asian and American share markets as it is the ASX,” he says.
“You open a single account and have access to all the global markets,” he says.
“If you just focus on the ASX market you are only looking at 2.5% global market cap so are missing out on opportunities.”
Saxo now has offices in 15 different countries, including Australia. Saxo Australia enables trading of more than 72,000 global instruments including Aussie and international shares, ETFs, bonds, exchange-listed options, futures, CFDs, and forex from 50+ exchanges across its platforms SaxoInvestor, SaxoTraderGO, and the customisable SaxoTraderPRO.
Saxo also offers multi-currency trading accounts, with clients able to open sub-accounts in 11 different currencies to save on foreign exchange conversion fees when trading.
“We’re quite active in APAC through Singapore, Hong Kong, Sydney, Tokyo and Shanghai and then we have our headquarters in Copenhagen and offices in London, Paris, Amsterdam and the big European centres,” Smith says.
“The company’s mantra is to democratise trading and investment so really delivering information, the tools, technology, and research to enable self-directed investors and traders to make better financial decisions.
“We’re not a personal advice business but a general advice business, but what we do is make it as easy as we can for our clients to invest globally.”
Saxo also provides trading and investing solutions for high-net-worth individuals, self-managed superannuation funds (SMSFs), and trusts.
“We compete with the likes of CommSec, Nabtrade and interactive brokers so put ourselves in that bucket where we seek to acquire our own clients,” Smith says.
“We also have a very strong institutional partner business which is a technology solutions business where we might have banks, brokers, hedge funds or family offices or anyone with a financial services licence who want to use our technology to run their business better.”
He says when Saxo first came to Australia it was very much focused on its institutional partner business.
“Over time we worked out in a country of more than 25 million people, and I think the latest stats I saw was 10 million consider themselves investors and about six million have online trading accounts, that Australia is a pretty good market for us with a really good product,” he says.
“Our two business lines run quite complementary to each other so we’re actively pursuing our own clients but also happy to partner with other institutions who have their own client base but want to improve their technology.”
The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.
This article was developed in collaboration with Saxo Australia, a Stockhead advertiser at the time of publishing. This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.