Spotlight – Australia’s investment in overseas share markets

An exploration of the markets, investors and shifting behavious shaping Australian abroad investment.

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Released
6/05/2026
Source
International Investment Position, Australia: Supplementary Statistics, 2025
Released
06/05/2026 11:30am AEST

Introduction/Overview

Australia has significant financial investment in overseas debt and equity markets. These assets have increased by over $2 trillion in the last 10 years, reaching $4.5 trillion as at the end of 2025. 

This article explores the drivers behind this growth, the target markets for investment, the main domestic investors behind those transactions and recent trends. 

What is Australian investment abroad and portfolio investment?

Australia’s International Investment Position is made from two key components, foreign investment in Australia and Australian investment abroad (AIA). AIA reflects the value of foreign assets held by Australian governments, resident businesses and individuals with the rest of the world, while foreign investment in Australia represents foreign claims on Australian governments, resident businesses and individuals.

Australian Bureau of Statistics reports of investment abroad according to functional categories defined by the International Monetary fund Balance of Payments Manual. The manual defines portfolio investment as a purchase of financial assets that doesn’t result in a controlling stake in the entity being invested in, distinguishing it from direct investment where there is a resulting controlling stake in the entity. Portfolio investment offers investors higher liquidity and lower risk through diversification, compared to more concentrated investments required to gain a controlling interest in a firm. Portfolio investment is further divided into equity and debt investment: equity incorporates a stake or ownership of shares in a listed or unlisted company, while debt comprises of loans and debt securities. 

Portfolio investment has driven the majority of growth in AIA over the last 10 years

Australia’s overseas portfolio investment has grown 170% over the past 10 years (from $0.9 trillion to $2.3 trillion), outpacing direct investment which grew 114% (from $570 billion to $1,217 billion) and other investment which grew 35% (from $711 billion to $959 billion) over the same period. Portfolio investment as a share of total AIA has grown from 40% in 2015 to 51% in 2025 and now represents the majority of Australian investment abroad. 

Equity investment into foreign share markets accounts for the majority of Australia’s portfolio investment overseas, comprising 76% of total portfolio investment assets in 2025. This share has grown from 63% in 2015 with growth in portfolio equity of over $1 trillion in the last 10 years. Portfolio debt investment overseas has remained relatively steady over the same period. 

The United States of America has been Australia's preferred investment destination

With the continued growth in overseas portfolio equity, the United States has consistently remained the top destination for Australia’s equity investments, representing as much as 57.7% of the AIA portfolio investment equity position at its peak in 2024. 

Increased net purchases as well as valuation changes have driven growth

Change in AIA portfolio Equity position for a country (as shown in Chart 4) is the combination of net purchases of equity (Transactions), and valuation changes of existing equity assets (Other flows). Valuation changes are largely driven by price changes of stocks as well as exchange rate changes. 

Australia has acquired an additional $364 billion of portfolio equity (net transactions) from the USA in the last 10 years, alongside a further $348 billion increase in equity due to valuation changes (other flows). The rise in other flows aligns with a more than tripling of the S&P 500 index, driven by technology stocks as well as a sustained period of low USA interest rates.  Adding to this is a 16% depreciation of the Australian dollar against the US dollar, which increases the Australian dollar value of portfolio equity denominated in US dollars. 

What is the main source of funds invested in overseas?

Net investment in foreign portfolio equity markets peaked at $161.6 billion in 2021 and was lowest at $7.6 billion in 2023, investment was steady at ~$100 billion in both 2024 and 2025.

Superannuation funds were a key driver of this investment. Superannuation funds have contributed more than 60% of net purchases in overseas portfolio equity in five of the past seven years, highlighting their central role as the main source of funding for portfolio equity investment.

Why do super funds need to invest overseas?

Superannuation funds operate within a regulatory and economic framework that requires prudent diversification to safeguard members’ long‑term retirement outcomes. The Superannuation Industry (Supervision) Act 1993 obliges trustees to consider diversification and concentration risk when setting investment strategies, and the Prudential Standard 530 reinforces this by requiring funds to avoid excessive exposure to any single market, sector, or economic cycle. Because the Australian market is heavily concentrated in banking and resources, relying solely on domestic assets would leave members vulnerable to sector‑specific shocks, commodity price swings, and local economic downturns. Investing offshore allows funds to meet these legal duties by spreading risk across different countries, industries, and currencies—an essential consideration for a system that has grown to around $4.3 trillion in assets at the end of 2025.

Global investment is also necessary because Australia represents only a small fraction of global capital markets. Limiting portfolios to domestic assets would exclude access to major growth sectors—such as global technology, healthcare, and advanced manufacturing. International diversification improves long‑term risk‑adjusted returns and provides exposure to a broader set of economic drivers. In addition, the scale of annual superannuation inflows exceeds what the domestic market can efficiently absorb without distorting asset prices or reducing investment flexibility. Allocating capital overseas ensures that funds can deploy contributions effectively while maintaining liquidity, stability, and competitive returns for members.

Purchases of portfolio equity in 2025 favoured non-USA markets for the first time since 2019

In 2025, the net acquisitions of the USA portfolio equity (+$43.3b) was smaller than the net acquisition of non-USA portfolio equity (+$57.6b). This reflects Australian investors diversifying their portfolios into other equity markets. While the USA remained the single largest country where Australians bought portfolio equity, investors sought investment opportunities in other markets including Japan, United Kingdom and Ireland.