Australia hasn't had a recession for 25 years, which has made it a great place to operate a business. However, the large ASX-listed companies are now showing growth is no longer easy.
Potential problems are rising for Australia's economy and GDP growth is slowing to a snail's pace. I think it's time to build up your investments with overseas exposure.
There are also pull factors towards USA-focused investments with Donald Trump's mantra of growth and specifically his promise to cut the tax rates of companies. Here are some of my favourite international investment ideas on the ASX:
MFF Capital Investments Ltd (ASX: MFF)
This is a listed investment company run by Magellan Financial Group Ltd (ASX: MFG). It has the freedom to invest anywhere in the world, which gives the investing team a lot of flexibility.
At the end of December 2016 its top five holdings were: Visa, Bank of America, Home Depot, MasterCard and Lowe's. It looks like the investment team are making good choices and could keep outperforming the market.
This LIC has done so well that the share price has risen by 169.5% over the last five years and could keep growing strongly. It's currently trading with a trailing grossed up dividend yield of 1.54%.
Vanguard US Total Market Shares Index ETF (ASX: VTS)
This Vanguard exchange traded fund (ETF) is invested across thousands of companies in the USA, giving fantastic diversification for an investor.
The management cost of this Vanguard fund is only 0.05% per annum. This is very cheap compared to the fund's return which has been an average of 21.85% per annum for the past five years.
This index could rise strongly if Donald Trump's tax reform is carried out.
iShares S&P 500 ETF (ASX: IVV)
This index tracks the S&P 500, which contains many of the biggest companies in the USA. This index has very good diversification thanks to the global reach of many of the constituents. Its top five holdings are: Apple Inc, Microsoft Corp, Exxon Mobil Corp, Amazon Com Inc and Facebook Inc.
This fund also has a very low cost fee of 0.05%. It has achieved an average return of 21.96% per annum for the last five years, which is very impressive, but probably won't be as strong over the next five years.
Foolish takeaway
All three of these investments have provided investors with great returns. I think it's very important for all Foolish investors to have international diversification in their portfolios, particularly as Australia's economy is slowing down.
I would choose MFF Capital and the Vanguard ETF if I had to pick two options. However, the problem is that none of the above options are paying large dividends. This stock is expanding overseas and has a large fully franked dividend.
