Five years from now, these are the companies everyone will wish they owned

Patrick Ian Polk (0:13)

All right, we've got the poll results. Can we see where people are feeling? So what have we got? Have we got the results if people drop them in? All righty, I've got a healthy allocation. 19% if Jensen sneezes. My retirement date goes back five years.

Almost nothing among BHP, Comback and Cash. I once dabbled in a NASDAQ ETF through my online broker. Very good. All righty, so everyone's feeling pretty healthy about their global shares allocation. A few of you Jensen Huang supporters have been enjoying Nick Griffin's presentation early. Very bullish on AI. And so this session is going to be about global equities. And just a few stats for you over the past five years. The S&P 500 has returned about 90%. That compares to 18.25 for the Australian market. That number gets better, 41% if you include the dividends, but still a long way behind.

A couple of other estimates for you. Bloomberg have estimated that since late 2022, almost $33 trillion in market value has been added to the S&P 500, with the vast majority of that coming from companies tied to the AI technology boom. So it's been a great source of growth. And as we've heard a little bit today, belief that it can continue, but some concerns about where you might get some diversification and how much you might be exposed to that one theme. So with my guests today, we're going to go and see if we can go a little bit off-piste and explore some other parts of the market. And Vihari, you know, grew up in Dubbo.

Like venturing off-piste, I imagine, going off-track. Probably hard to imagine growing up in a country town in Australia, thinking about the sorts of companies you're going and finding out in the world.

Vihari Ross (2:20)

Well, yeah, I guess so. There's probably a few whole to follow just out there. But I would say this is such a common thing about global equities that people say that they're less familiar with global equities because we live in Australia. And like we use Microsoft every day. We go shopping at Woolies and buy global products.

We watch Netflix or, you know, use Spotify. We use global companies every day. We're just as familiar with them as we are with Australian companies. In fact, I would say I know more about or use global companies more than I know how to get minerals out of the ground or, you know, banks are the same everywhere. So they're just cheaper than they are in Australia.

So I think, yeah, look, the benefit of perspective living in Australia means you can be objective in analysing global equities and that's pretty good, I think, for stock picking. Yeah.

Patrick Ian Polk (3:16)

Well, I suspect most people have heard of Dubbo. Andrew, you're from another small town in Australia, a little place called Adelaide. I'm not sure if many of you.

Vihari Ross (3:25)

Slight, yeah.

Patrick Ian Polk (3:26)

I mean, get away with that because I was born in Adelaide.

But you cut your teeth in Australian equities and had established an incredible track record in small and mid caps over a period of time, but have expanded that capability into your business. Maybe because I think people would recognise the Australian stock picking part of Ophir, maybe the Australian Funds Manager. How has that journey seen you being into Globals? Why?

Andrew Mitchell (3:54)

Well, we're now bigger globally than we are in our global investments than we are in Australia. And I'd just like to point out that with Australia, what is it, 28 million people? Our Australian businesses are selling predominantly to 28 million people. And as an Australian investor, we get so excited when there's an Australian company that goes to the US and sells a little bit of their stuff.

But that's a lot of risk associated with getting over there and a new culture and time zones and the like. And the market rewards them very heavily early on. There have been very few that have been able to actually carry on with it.

Looking at the US, a country of what, 350 million people, we find in small caps, there's lots of companies that maybe they're just starting off in Texas. What's the size of Texas? 50 million people or so. And then expansion is moving to Mississippi, Louisiana, Florida. And they're accessing economies bigger than, yeah, that old Gulf State region that they're accessing, the rest of it, and maybe throw in Georgia as well, is probably twice the size of Australia. And the risk in doing so is far less. But the US market doesn't pay up for that because it's so common. Small cap companies expanding through the US. So the opportunity, and this is from a US, but also in Europe as well, is just significantly more. And think about it in terms of market size than Australia. And that's been the big difference that I've realized. Lower risk for higher growth, lower risk and higher growth for that risk.