Investors are often advised to spread out their exposure across different geographic locations as well as industries.
Large investment funds have the access and scale to put money to work around the world, but this is not as easy for retail investors. Buying stocks of companies in international markets can be difficult, expensive, and risky. Higher fees, political uncertainty, and currency risks are just a few of the obstacles the average Canadian would face when trying to invest directly in international opportunities.
Fortunately, there are a number of Canadian companies with extensive international operations that can serve as adequate vehicles to build global exposure into your retirement fund while minimizing costs and risks.
Let’s take a look at one specific stock that might be an interesting pick right now for a diversified RRSP portfolio.
Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM)
Brookfield Asset Management is an alternative asset manager with holdings around the world that include real estate, renewable power, private equity, and infrastructure. In total, the firm has US$350 billion in assets in a diversified portfolio the company has amassed over the past 120 years.
Net income soared 65% in 2018 to a record US$7.5 billion, and the company reported a 16% increase in funds from operations compared to 2017. The leadership team has been busy in the past 12 months, investing or committing US$35 billion in new transactions. Brookfield Asset Management has strict criteria for putting its cash to work but is still finding attractive assets around the world. The real estate business completed the acquisition of a US$15 billion retail mall portfolio and added a US$11 billion portfolio of office and residential properties. In Europe, the company purchased solar and wind assets in Spain. Other acquisitions included a battery manufacturing firm, natural gas transportation assets, and a leading residential energy infrastructure provider.
Despite the active 2018, Brookfield started 2019 with warchest of US$34 billion in capital available to invest.
Free cash flow exceeded US$2 billion last year and that is expected to increase in 2019. As a result of the strong performance and positive outlook, the board raised the quarterly dividend by US$0.01 to US$0.16 per share, representing a 7% increase over the previous payout.
Management isn’t afraid to lock in value and will sell assets when attractive offers arise. Disposition gains added US$1.5 billion to funds from operations last year, providing additional cash for deployment in new opportunities.
The bottom line
Brookfield Asset Management has the scale and expertise to acquire attractive global assets that would otherwise be out of reach for most companies. This provides Canadian retail investors with access to a diversified high-quality international portfolio through a single stock.