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.