New Zealand and Australian investors are not investing enough in global equities, says Jack Lowenstein, of Morphic Asset Management.

He says research has shown that independent investors have less than 5% of all their assets in global equities, compared to groups such as superannuation funds, which typically have about 30%.

While that has been a good strategy for private investors over recent years, as the Australian and New Zealand equity markets outperformed their global counterparts, Lowenstein said that would change and investors could be hurt by their underexposure to global investments.

Morphic has this week made its global equities fund available to New Zealand investors. It has been operating for Australian investors for the past 10 months. It has reported returns so far of 20.43% compared to the MSCI All Countries Total Return Index of 20.56%.

Lowenstein said investors were wary of managed funds because, during the global financial crisis, private investors who were investing directly did much better than managed funds that had seemingly more sophisticated strategies.

“That has made investors a bit negative about managed funds but I don’t think [investing in global equities] is something that can be done as easily. There are market access issues and much higher risk.”

He said the end of the Chinese boom would slow the performance of many Australasian shares. “I think we’ve seen the high water mark for resource prices.”

Much of the strength of New Zealand and Australian equities was also down to the strength of the countries’ currencies, he said, which would eventually subside. “I think global equities will outperform Australian equities again.”

MGOF invests in global equities using a long bias long short-short strategy. Stocks in the portfolio at the moment include the Manila Water Company, a Japanese karaoke equipment manufacturer and a US house building company.

Morphic isn’t the only firm trying to tempt Kiwi investors into global markets. BNP Paribas Investment Partners this week announced the launch of the Carnegie WorldWide Equity Trust, which provides Australian wholesale and New Zealand habitual investors with access to Carnegie Asset Management’s global equity strategy.