International outperformance

International assets have been killing it.

This performance is hard to miss compared to the lacklustre performance of the Australian market.

This is an interesting interview about the US market and worth a listen. While I don't forsee absolute carnage in the markets, I do expect divergence within the market, much like the ASX has experienced for the last four years.

The important part to note is that the AU index has gone nowhere, while Mid-Cap starts such as Aristocrat (ALL.ASX) and others like it, have soared (see chart below showing ALL over the last 5 years):

As Australian investors, we could invest in the US, but I feel the blanket/shotgun approach is destined for the same outcome AU has had over these last four years - it never continues forever.

The challenge is identifying the right international market to hone in on; US, EU, Emerging, Asia, Large-Cap, Small-Cap, Mid-Cap, Yield-focused, Defensive, Growth, Domestic focused, Internationally focused etc.

I've been meeting with research houses, fund managers and analysts over the last month discussing this very point. While they all want to sell something, it's my job to find investors the solution that fits best - and that I do not have yet - until then the preferred home for funds is in alternative investments (those that make money being in the market, not from what the market does). See the Portfolio Series for explanations and examples of these kind of assets.