Many people who invested offshore before the rand plummeted this year are laughing all the way to the bank. But not all if you were invested in some rand-denominated unit trust funds, your money would not even have earned as much as a bank deposit in dollars.
Of the funds with one-year performances, Sanlam Global, Old Mutual Global Equity, Standard International, Investec World Wide and Fedsure Global, produced returns for investors which did not only flow from the slide in the rand but also from good investment choices.
But the other five funds failed dismally to serve as a rand hedge. The Syfrets Universal Opportunity Fund, the Southern Global Fund, the Absa International Fund, the BoE Global Fund and the Sage Global Fund all showed gains which under-performed the returns from the fall in the rand over the one-year period to June 30 this year.
Over the year, the rand fell just under 30 percent against the dollar and all five funds failed to produce returns which were higher than this.
Questioned about this, many of the fund managers say it is unfair to judge their performance against gains from exchange rate changes.
Angela Delport, product manager for unit trusts at Nedcor Investment Bank (NIB), says one of the main objectives of the Syfrets Universal Opportunity Fund is to provide rand-hedge protection, but this doesn't necessarily mean against the dollar, pound or yen.
She says NIB uses the Morgan Stanley World Index (MSCI) as a benchmark instead of any particular currency and that against this index the fund showed up well.
Barry Botes, managing director of Absa Asset Management, says it is unfair to compare the performance of the fund with the rand/dollar exchange rate.
"If you convert it back into rands, the currency will outperform anything, because it is an unnatural situation. It is really not a fair comparison, because you are working on the assumption that, if you had stuck with your money in dollars, you would have done better."
Botes says Absa's fund, which is 70 percent invested offshore, is still "on the low side in terms of foreign exposure".
Dirk Stofberg, fund manager of the Sage Global Fund, says for the first six months of the fund's history, it was not really fully invested overseas.
"We argued that while we were still in South Africa, we should be in exports and primarily in mining stocks. And we all know what happened then in South East Asia. We performed very badly and that is the big reason."
Stofberg says the fund's performance has picked up since it has been substantially invested offshore.
Tanya Allardice, investment manager at BoE, says the fund's poor performance can be ascribed to the fact that it bought offshore shares for the first time only in September 1997.
Prior to that, it was exposed to South African-listed rand-hedge shares.
Craig McKay, head of marketing at Southern Unit Trust management company, says the reason for the Southern Global Fund's poor performance was that its foreign investments were limited by law until October last year.
"In other words, our global equity exposure could only be to a maximum of five percent in any fund.
"The rest (95 percent) was in domestic hedge shares and this was the reason for the underperformance."
From October 1997 until June 30, this year, 95 percent of the fund has been invested in global shares. McKay says the fund has done well since then.