Written

For

The

Australian

-

Why

Australian

investment

experts

believe

the

money

will

be

made

on

overseas

markets

Would you bet on Nvidia repeating a 3000 per cent run, or is the smarter money now on the corner cafe using AI to predict its Friday night rush?

That was the mood at this month's Portfolio Construction Forum in Sydney, where some of the sharpest minds in wealth management gathered to argue over where the returns will come from over the next 12 months. I was there, and the consensus was clear: the easy money on mega-cap tech is behind us. Stage two of the AI boom belongs to the businesses that use AI, not just the ones that build it.

Here's what struck me. Of the delegates, 60 per cent voted to hold more US shares than normal. Only 7 per cent wanted more Australian shares. Evergreen's Angela Ashton called the top 10 ASX stocks expensive, and I don't disagree — when Goodman Group alone makes up nearly 40 per cent of our listed property sector, diversification at home starts to look like a myth.

The more interesting debate was China. Platinum's Andrew Clifford made the point that Chinese shares trade on a P/E of around 10, while US companies with heavy China exposure like Nike trade at 22. If you believe in mean reversion, that's a gap worth watching.

Small caps were the other standout call. With interest rates at their peak and expected to fall, smaller, nimbler companies stand to benefit most — and they can adopt AI faster than the corporate giants weighed down by legacy systems.

On bonds, Clifford wants duration, not credit. His logic: those 8 per cent credit fund returns will drift back to 3 per cent as rates fall.

And on the Aussie dollar? Only 7 per cent of delegates wanted to hedge. The smart money is betting 68 US cents is more likely to fall than rise.

The wildcard remains an inflation-driven recession. Get that, and every one of these calls flips.