According to the 2006 Australian Share Ownership Study released by the ASX in May 2007, 7.3 million, or 46 per cent of adult Australians owned shares either directly or indirectly via a managed fund or self-managed superannuation fund.

Share ownership in offshore listed markets increased from seven per cent in 2002 to 14 per cent in 2004 and again to 19 per cent in 2006. This may suggest that share owners are becoming more comfortable investing overseas and may also lead to a more sophisticated investor. However, given recent relative performance in the Australian and international sectors, many investors may be asking, "why would I invest offshore when the performance in Australia has been so good?"

Over the past few years, returns from the domestic share market have been superior to international markets. Australia however only represents around 2 per cent of the total world sharemarket and is heavily skewed towards the banking and resources sectors. Whilst it is conceivable that this bull run will continue, history tells us that markets are cyclical and such a long-run of outperformance is unique.

Studies have shown that by simply adding international shares to your domestic share portfolio, you can reduce your clients overall portfolio risk. This is because overseas share markets typically move quite differently from the Australian share market, helping to smooth out the ups and downs of each.

Since 1997, Vanguard has offered hedged and unhedged international share index funds which invest in around 1,700 shares listed on the exchanges of 22 of the world's major economies.

The objective of the funds is to match the total return of the MSCI World ex-Australia Index (with net dividends reinvested) before taking into account fund fees and expenses.

The funds may suit your clients if they are looking for access to some of the world's best performing companies listed on overseas stockmarket and if they are looking for a diversified approach which provides a low-cost way of achieving long-term exposure to international share markets.

Over the very long term, while past performance is not a reliable indicator of future performance, international shares have historically provided higher returns than Australian shares. Share investments can add an aggressive growth component to a long-term investment portfolio, Consider the diversification benefits through the inclusion of different markets and economies and remember that a well-balanced portfolio of both Australian and international shares, has historically, provided a more diversified portfolio with possibly, lower risk than a portfolio of just Australian or international shares.