No hedge at all

Finweek English Edition - - Property Compass -

LOOKING AT SOME re­cent re­sults and prospects for large South African­based com­pa­nies, the shares that are among the cheapest with share prices that have been bat­tered are those with large op­er­a­tions or sources of rev­enue over­seas.

Those are what col­league Vic de Klerk calls the “new rand hedges”. Right now they’re do­ing lit­tle to pro­tect in­vestors’ rand cap­i­tal in­vest­ment money.

Your rand will prob­a­bly get bet­ter pro­tec­tion in a for­eign cur­rency fund – as long as you don’t take a huge bet against the fu­ture di­rec­tion of the rand but in­stead use the fund as for­eign cur­rency di­ver­si­fi­ca­tion.

In­vestors looking for for­eign eq­uity ex­po­sure would prob­a­bly also be bet­ter off in a fund. Our rand hedge shares – Bar­loworld and Sappi spring to mind – are do­ing well in south­ern Africa but can’t seem to get it right over­seas.

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