Un­founded fear

Finweek English Edition - - Creating Wealth - MARC ASH­TON From Fin24.com

WHILE MORE South Africans are be­gin­ning to wise up to off­shore in­vest­ment op­por­tu­ni­ties, the pref­er­ence still seems to be for in­vest­ments with a lo­cal flavour. Many an­a­lysts rec­om­mend be­tween 30% and 40% of a port­fo­lio should be in­vested off­shore. Yet South Africans have been so con­sumed with the out­per­for­mance of lo­cal mar­kets, they’ve failed to di­ver­sify their in­vest­ment bas­ket.

That’s ac­cord­ing to Di Turpin, of the As­so­ci­a­tion of Col­lec­tive In­vest­ments. Re­port­ing on the latest fig­ures cov­er­ing for­eign cur- rency de­nom­i­nated funds, Turpin says to end-June just un­der R112bn was in­vested in off­shore fund as­sets, while R656bn was in­vested in SA funds.

Data sup­plied by Equinox.co.za shows no for­eign-based gen­eral eq­uity fund unit trust had de­liv­ered a pos­i­tive re­turn for in­vestors over the past year. The best-per­form­ing fund over 12 months was the Coris Cap­i­tal In­ter­na­tional Eq­uity Fund of Funds, de­liv­er­ing a -0,25% re­turn. The worst per­form­ing fund was the SIM Global Best Ideas Feeder Fund, which con­tracted by 18,66%.

How­ever, over a three-year pe­riod the RMB In­ter­na­tional Eq­uity Fund of Funds de­liv­ered a 69,05% re­turn for in­vestors seek­ing ex­po­sure to in­ter­na­tional eq­uity mar­kets. But Deutsche Bank’s X-Tracker ex­change-traded fund (ETF) seems to be at­tract­ing in­vestors’ funds, even if re­turns aren’t yet be­ing de­liv­ered.

Ian Leisegang, head of global eq­uity at Deutsche Bank, says many South Africans are only be­gin­ning to see the op­por­tu­ni­ties that ex­ist to di­ver­sify their port­fo­lios. Leisegang

heads Deutsche Bank’s X-Tracker prod­ucts, which pro­vides SA in­vestors with the op­por­tu­nity to in­vest in ETFs, giv­ing easy ac­cess to other in­ter­na­tional mar­kets.

In April this year Deutsche Bank in­tro­duced three new funds, giv­ing South African in­vestors the op­por­tu­nity to in­vest in the Ja­panese, US and world MSCI in­dices. In four months, as­sets un­der man­age­ment in those ETFs have grown to R55m, R57m and R99m re­spec­tively. It means or­di­nary South Africans can pas­sively in­vest in the best per­form­ing com­pa­nies in those re­gions and make di­rect in­vest­ments in the likes of Toy­ota, Honda, Mizuho, Coca-Cola, Gen­eral Elec­tric and Google.

How­ever, the X-Tracker’s per­for­mances are linked to eq­uity mar­kets and in­vestors have seen their in­vest­ments come un­der pres- sure in line with other mar­kets over the short term. ACI’s fig­ures show a net eq­uity out­flow of R2,9bn by re­tail in­vestors in the for­eign cur­rency-de­nom­i­nated funds in the June quar­ter against an in­flow of R1,1bn into in­sti­tu­tional funds, re­sult­ing in a net to­tal out­flow of R1,8bn from eq­uity funds.

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