An international opportunity and how to buy it in your super
Developments in superannuation products allow you to invest in opportunities like this UK share-registry provider
I recently switched from a retail superannuation fund to a DIY fund operated by an independent platform provider. The primary reason was that I wanted greater flexibility in managing my super.
Historically, a self-managed super fund (SMSF) structure has been the best solution. However, there are significant costs in the administration of such funds and is often not viable for a portfolio under a few hundred thousand dollars.
I recently came across Netwealth's superannuation products that provide the simplicity of a retail super fund, and the control of an SMSF (albeit with some limitations).
Similar products are available, but investment options are typically limited to the Australian share market. Netwealth enables investment in foreign markets - something I wanted for diversification and to take advantage of interesting opportunities.
We recently reviewed such a potential international investment - though through an Australian listed exchange-traded fund. This time, we have a foreign stock that Australian investors may be familiar with.
Equiniti Group plc is a UK-listed share registry company and a competitor to locally-listed Computershare and Link Administration Holdings. We've come across Equiniti as part of our coverage of the Australian-based rivals. These businesses have attractive traits with sticky customers, scale benefits and predictable earnings.
Growth is usually pedestrian, but Equiniti's outlook is appealing as it has expanded into the US with the purchase of Wells Fargo Shareholder Services from the US bank. That acquisition catapults Equiniti into second spot for market share in the US and gives it the ability to cross-sell with UK clients. Earnings growth might also be achieved by reducing duplicated costs upon integration.
Equiniti has a few other divisions. It handles administrative services for pension schemes and businesses in the UK. Analysing these segments is tougher considering the range of products and services on offer, but the division tends to also have high customer retention and scale benefits.
Equiniti is an appealing business. It's also available at an attractive price, with a price-earnings ratio of around 10 based on consensus estimates for 2019. That's comfortably below that for Computershare (17x) and Link (15x).
With decent growth prospects, demonstrable competitive advantages, and a simple business model, Equiniti is one worth researching further for investors looking for international stocks. You may even consider it for your super.
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