How To Take Your Money Abroad

There’s a huge variety of investment options beyond South Africa’s borders. In this comprehensive guide, finweek provides an overview of the vehicles you can use to do just that. We also consider which asset classes you should look at and what the risks are, as well as which countries and regions look promising.

- Mariam Isa

South Africa’s political and economic fortunes may have turned the corner, and the strong rally in global equities seen over the past decade appears to have ended. But the case for investing offshore is as compelling as ever – particularly as the rand’s strong gains over the past year means investors will get more value for money.

However, there is broad consensus that taking money offshore primarily to hedge against possible rand weakness is a mistake, as the volatile currency repeatedly defies expectations – its appreciation of more than 8% since early 2017 took asset managers, analysts and currency traders by surprise.

The main reason for investing in foreign markets remains the fact that they offer more opportunities to diversify assets and mitigate risks, as the structure of the JSE is highly concentrated in a few large companies, asset managers point out.

“If you invest offshore now, you do it from a position of rand strength,” says Rhynhardt Roodt, the co-head of Investec Asset Management’s 4Factor global equity team. “But it’s more about diversification – people often miss how small the South African investment market is – there’s a whole world out there.”

Another factor to consider is that for the first time since the global financial crisis in 2008, there is synchronised global growth, the main factor that drives corporate profits and share prices.

Attractive opportunities

Although markets are likely to remain volatile this year after a spectacular plunge in January, the trend in global equities is likely to remain upwards – so if your investment horizon is more than 10 years, the best place to be is in equities, Roodt adds.