Fortrend’s mission is to help Australian investors diversify their investment portfolios into sectors of the economy not available on the Australian market. The objective is to mitigate risk, limit costs, and improve returns.
Due to tax incentives, franking credits in particular, the Australian stock market is Austral-centric, income focused, and protectionist:
- Austral-Centric: Imputation encourages Australian companies to earn income in Australia to generate franking credits. Generally, income earned offshore does not qualify for franking credits. Therefore, Australian listed companies have become Austral Centric.
- Income Focused: Investors in Australia prefer that Australian listed companies distribute franked income today, rather than invest for growth, which would generate taxable capital gains in the future.
- Protectionist: Foreign investors do not get the benefit of franking credits and are at a competitive disadvantage to Australian investors, particularly superannuation funds which get a rebate for taxes paid at the corporate level.
The net effect is that the Australian market provides very little global growth oriented investment opportunities.