I would like to invest some money offshore, but I’m not sure if doing so will yield better returns with the current state of global markets. What should I do?
Name withheld
Adriaan Pask, chief investment officer at PSG Wealth, responds: Offshore investment plays a very important role in the diversification and risk management within a portfolio. However, when it comes to financial advice we need to consider that each person’s circumstances are varied, and this will affect the approach.
Due to the numerous challenges that South Africa faces, the opportunities might seem brighter on the other side. However, we’ve seen some of the country’s largest investment managers warm up to domestic assets lately.
That said, how do you decide how much of your funds to invest offshore versus locally? Our valuation process shows the prospects for SA investments are currently more positive than over the last ten years.
When local and offshore valuations are similar, by all means, go where there is growth. However, in the current environment, valuations are so high in the US, our belief is that earnings will only allow firms to grow into their steep valuations, and don’t expect much further multiple expansion. Even though we need a lot of improvement to turn the South African economy around, the same does not apply to the investment landscape.
Any decision to invest offshore should be considered carefully, so using a skilled financial adviser is a key component to making your money grow.
This letter appeared in YOUR QUESTIONS ANSWERED in Saturday Insider on September 25, 2021. The regular monthly feature is sponsored by PSG Wealth. Email money queries to [email protected]