Three off­shore ETFs to con­sider

Off­shore in­vest­ment is no longer the risky busi­ness it used to be and when con­sid­er­ing your op­tions, ETFs can­not be ig­nored. To pique your in­ter­est, here are three that are in the top 100.

Finweek English Edition - - MARKETPLACE INVESTMENT - Ed­i­to­rial@fin­week.co.za

in­vestors have a ten­dency to choose sides when it comes to the in­vest­ment world and in many cases, sim­ply out of greed, also then tend to make the wrong in­vest­ment choices. Glob­ally, in­vestors have thou­sands of funds to choose from, each with its own colour­ful brochure ar­gu­ing why it’s likely to out­per­form this stock mar­ket or that bench­mark.

The re­al­ity, how­ever, is that only a few of them ac­tu­ally man­age to out­per­form un­der­ly­ing in­dexes con­sis­tently. By us­ing our Do­mes­tic Gen­eral Eq­uity Unit Trust sec­tor’s per­for­mance over the past 12 months as an ex­am­ple – most of which use the FTSE/JSE All-Share In­dex as a bench­mark – like many other years, only 30% of all the funds in this sec­tor man­aged to out­per­form this in­dex in the last year (up to 26 Oc­to­ber).

I don’t want to take up the de­bate be­tween ac­tive ver­sus pas­sive man­age­ment again. In fact, I would like to move away from lo­cal in­vest­ments com­pletely this week and rather turn read­ers’ at­ten­tions to­wards off­shore ETFs and more im­por­tantly, to al­ter­na­tive in­vest­ment op­tions.

I’ve men­tioned be­fore that off­shore in­vest­ment isn’t nearly as dan­ger­ous or ar­du­ous a task as it used to be. An in­di­vid­ual may in­vest up to R1m on a one-off ba­sis, with­out tax clear­ance, or up to R10m per cal­en­dar year with Sars tax clear­ance. The open­ing and man­age­ment of off­shore eq­uity – and ETF port­fo­lios – has been sim­pli­fied to such an ex­tent that it cer­tainly can’t be ig­nored as an in­vest­ment op­tion any longer.

ETFs are highly trad­able funds listed on the stock ex­change with the goal of yield­ing 100% of the re­turns of a spe­cific in­dex, such as the MSCI World In­dex, for ex­am­ple. As with shares, th­ese ETFs can be bought or sold on any global ex­change. With such an abun­dance of op­tions avail­able, how­ever, I will only dis­cuss three of th­ese funds this week.

As pas­sive as ETFs may sound, it has be­come the fastest grow­ing in­vest­ment field world­wide, def­i­nitely mak­ing it an in­vest­ment op­tion worth con­sid­er­ing in your port­fo­lio.

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