It’s about accessing opportunities outside of our local investment universe - June 2021
South African investors who restrict their universe to domestic assets not only miss out on opportunities in industries that are hardly present in the local market (e.g. information technology, biotechnology, electronics, pharmaceuticals) but also on a much wider opportunity set within those industries (see below). By opening up your investment universe, you gain access to a more diverse opportunity set, as well as to better businesses with better earnings prospects.
Furthermore, by diversifying your investment portfolio to include international assets, you gain access to growth regions that benefit from mega-drivers, such as innovation, industrialisation, urbanisation, digital advances and growing consumerism. From Figure 2, it is clear that economies’ ability to innovate (a critical driver of growth and prosperity) resides predominantly outside of our own borders. By adding global diversification to your portfolio, you are able to enhance your investment outcomes.