INVESTING OFFSHORE - July 2017
The case for investing abroad remains as strong as ever. Amid heightened economic and political uncertainty in South Africa, exposure to other markets can help protect investors against potential future currency shocks and other local risks. Also, as the global economy remains resilient and technology advances, we continue to find long-term investment opportunities which can grow investment returns for many years to come.
We believe global equities remain the asset class most likely to protect the purchasing power of investors over time. Still, international markets have grown more expensive in recent months (especially compared to the depressed local market), and we believe careful, active investment is required.
In previous issues, we have argued the benefits of increased offshore allocations for most long-term investors. Today, as a consequence of the increased popularity of multi-asset funds, many South Africans have more appropriate exposure to offshore assets.
Pension fund assets in particular now have increased international exposure. Our multi-asset funds are not only at their maximum allowable direct offshore limit (25%), but are also invested in global companies that are listed in SA (e.g. Anheuser-Busch Inbev, Naspers and British American Tobacco). As a result, many pension fund investors already have a relatively large exposure to foreign markets.
For those investors with discretionary savings, using a foreign-domiciled fund for their global exposure should be considered. Given the current exchange rate controls, it remains relatively easy to invest in these funds. With our foreign-domiciled funds, your investment is converted into a foreign currency and kept in an overseas investment account.
In this issue we look at global investment options, and revisit our international investment philosophy and approach, as well as discuss the current positioning within our multi-asset international funds.