Should your portfolio visit Australia?

Email to a Friend


“Australia now is one of the great investable locations,” claims Terry Connelly, who is dean of Ageno School of Business at Golden Gate University, San Francisco. “Australia is a leader in both finance and natural resources in the Pacific Rim area,” adds Charles Scott of Pelleton Capital Management.

Connelly tells Consumers Digest that Australia has a stable economy that was lucky enough to miss the global recession. Its resources sector—particularly coal, iron ore, and natural and liquid gas, all of which it exports—enjoyed a boom. The land down under also has a stable banking industry; a government that boasts a strong social security program and a surplus of funds; and a real estate market that has good underwriting practices.

Connelly recommends the following investment choices: The mining company BHP Billiton (ADR) (NYSE: BHP; price: $81.36) and ResMed (NYSE: RMD; price: $61.38), which is a holding company that has subsidiaries that manufacture sleep-disorder breathing equipment. The list also includes Australia’s four big banks, which the government won’t let merge or be bought by outsiders. They are: National Australia Bank (ASX: NAB; price: $27.69 ASD), Commonwealth Bank (ASX: CBA; price: $58.05 ASD), Australia and New Zealand Bank (ASX: ANZ; price: $25.16 ASD) and WestPac (ASX: WBC; price: $27.78 ASD).

“The easiest way to own Australia is through the iShares MSCI Australia Exchange Traded Fund (NYSE: EWA; price: $25.49),” Scott believes and adds that BHP Billiton, Commonwealth Bank of Australia and Westpac make up 32 percent of the ETF’s holdings.