JUST BECAUSE YOU DON'T PLAN TO SPEND MONEY ABROAD IN FUTURE, DOESN'T MEAN YOU CAN'T BENEFIT FROM INVESTING OFFSHORE
Published December 2019
So you’re already saving for retirement and have some additional money you’re thinking about investing.
You don’t have any plans to spend that money abroad in future, and so you wonder whether investing offshore is right for you. But you also don’t want to miss out on opportunities available in markets outside of South Africa.
The good news is that you can keep your options open and give your money access to a greater set of opportunities by investing in a rand-denominated worldwide flexible fund or offshore feeder fund.
How do you know which type of fund is best for you?
The answer may be as simple as thinking about how much of that money you want to invest offshore.
If you know how much you want to invest offshore
If your goal is to remain in South Africa and you know what portion of your savings (outside of your retirement fund) you want to invest offshore, you can consider investing in a rand-denominated feeder fund that only holds international assets.
Options include single-asset class funds (such as a global equity fund) or multi-asset class offshore funds (such as a balanced fund, which is diversified across the different global asset classes).
At Coronation, we believe that in times of increased economic uncertainty most investors are better served by investing in a balanced fund where the professional investment managers actively vary the exposure to different assets on your behalf. We offer two such funds: Coronation Global Managed (ZAR) Feeder and Coronation Global Capital Plus (ZAR) Feeder.
Coronation Global Capital Plus (ZAR) Feeder is a lower risk fund, which means that it is suitable for investors who seek some exposure to global growth assets (such as equities and property), but who also cannot withstand potential negative returns over shorter time periods (such as 12-18 months). Coronation Global Managed (ZAR) Feeder may be more appropriate for those with savings goals of 5 years and longer and who are willing to withstand some shorter-term volatility in the pursuit of longer-term growth.
These funds are also ideal for those investors who want to build up capital in rand terms before eventually investing it in a hard currency-denominated foreign domiciled fund.
If you are unsure about how much you want to invest offshore
If your goal is to remain in South Africa but you don’t know what portion of your savings (outside of your retirement fund) should be offshore, consider investing in a rand-denominated worldwide flexible multi-asset fund such as Coronation Optimum Growth. This fund manages international exposure on your behalf without constraints, while still aiming to provide long-term growth for your investment in local currency terms.
What opportunities can I access?
With the domestic economy only representing 0.6%* of the global economy, it is only logical that one can access a greater opportunity set by investing in a global fund. There are industries that are not available through assets listed on the JSE (e.g. information technology, biotechnology and electronics), and a much wider opportunity set within industries. One such example is those luxury goods companies such as LVMH and Kering that are run by astute management teams with large shareholdings in their personal capacities. (You can read more about these investments here).
Not your type of investment goals?
Coronation offers a range of international funds to meet the many offshore investing needs of South African investors. All our funds are managed by our global investment team with a depth of experience across asset classes and geographies.
For more information about investing offshore you can read our Corolab guide.
The information contained in this article is not based on the individual financial needs of any specific investor. To find out more, speak to your financial adviser.
Coronation is an authorised financial services provider.
*Trading Economics, World Bank