Diversification is one of the primary drivers of offshore investment and the development of a global asset portfolio. It allows for far deeper engagement across portfolios and can allow for a steady return on investment that's worth the time and effort, says Jonel Matthee-Ferreira, the head of Absa Multi Management.
As an emerging economy, South Africa carries a higher level of risk. Conventional wisdom holds that markets such as Europe, the UK and the US are better options, however, the decision to invest offshore should be taken as part of an overall strategy. It should not be taken as a hasty step to escape political uncertainty.
Offshore investment should look to steady investment into markets that are balanced against the remainder of the portfolio. Emerging markets, such as India, show potential, but too much exposure can be risky. It is best to have a manager with a global mandate to consider the global alternatives while investing.
The shares in South Africa are concentrated and the market is dominated by the top five. Investors will, therefore, benefit from putting money in both developed and emerging markets. An investor should subscribe to a wide range of portfolios that have been constructed by an equity manager who looks at the worldwide jurisdiction to determine where the funds should be allocated.
South Africa is not the only country in a state of flux at this time. The UK is caught up in Brexit while the trade war between the US and China continues to have an impact worldwide. However, it's important to ignore the noise and stay focused over the longer term.
Supplied by Absa Multi Management