Strong gains in the United States and a fall in local currency has led to Australian workers parking trillions of dollars in overseas sharemarkets.

New figures from the Australian Bureau of Statistics (ABS) show total Australian investment abroad reached $4.5 trillion at the end of 2025 – an increase of more than $2 trillion since 2015. Overseas portfolio investment – including shares in foreign companies – reached $2.3 trillion in 2025.

The US is the preferred destination for Australians to invest, accounting for as much as 57.7 per cent of foreign portfolio investment at its peak in 2024.

Morningstar market strategist Lochlan Halloway said Australian investors have looked abroad due to the expansion of products enabling foreign investment, such as exchange traded funds, as well as the concentration of the local market.

“It’s not outright a bad thing that Australian investors are thinking a little more globally,” he said.

“A lot of Australian portfolio holdings are in Australian equities (when) we account for about 2 per cent of the global equity market by market cap.

“So we were already overindexed and there’s probably a balancing out of that, which makes sense from a diversifications perspective.”

Mr Halloway added the shift to invest in the US was not surprising given it is the world’s largest market.

“It’s a very high quality market, there’s many high quality businesses on (Wall Street) and there’s relatively stable institutions and rules of law,” he said.

“(Also) the earnings growth outlook particularly for US equities is probably more appealing than Australian equities, and that might be driving some money offshore perhaps seeking better value.”

According to the ABS, direct investment – where an investor holds a controlling stake in the business – reached $1.2 trillion in 2025, up from $570.2bn in 2015.

Australia also acquired an additional $364bn of portfolio equity over the last decade, thanks to the value of the S & P 500 index tripling and the value of Australian dollar falling by 16 per cent.

Superannuation funds were the main driver of foreign portfolio equity investment, contributing more than 60 per cent of net purchases in five of the last seven years. The ABS said solely relying on domestic investment would result in “sector-specific shocks, commodity price swings and local economic downturns”.

“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,” they said.

Mr Halloway said while there was not a shortage of investment in Australia, having a “balanced and diversified” portfolio was key for investors and the economy.

“Diversification is the only free lunch in investing, it’s probably the most important attribute for your investment portfolio,” he said.

“I understand why Australian investors like to invest here. Franking credits are attractive and there’s probably some degree of familiarity with the investment landscape here ... but the diversification argument is very strong.”