STOCKS THAT THE GLOBAL MANAGERS LIKE LOCAL FUND
with a fluctuating rand and the economy in a state of volatility, many South African investors are looking to diversify their investments internationally. But with endless options, where should you invest? finweek approached a number of South African fund managers to find out where they are investing abroad. The consensus among them is that US stocks are pricey and the UK faces too much uncertainty around Brexit. For these reasons, many fund managers are steering their clients’ money towards European companies.
Technology is still the sector most want to play in, although healthcare, finance and e-commerce are also among the fund managers’ favourites. Biotechnology, the space where healthcare and technology meet, was also flagged as a sector to watch.
In terms of investment strategy, there is more variation. Some fund managers are advising on short-term upswings, while others are focusing on building long-term portfolios that can withstand shocks. Some are choosing to invest directly in company stocks, while others prefer exchange-traded funds (ETFs).
Politics versus business fundamentals
One issue that most fund managers agree on is that company fundamentals have taken a back seat to political developments around the world. Many of the fund managers finweek spoke to said they have had to become more politically astute in order to do their jobs.
Jean Pierre Verster from Fairtree Capital says with politicians being so unpredictable, it makes it very hard to estimate companies’ futures.
Other fund managers suggest that when you start predicting political outcomes, you run the risk of speculating and making bad decisions. “If you try and build a portfolio on guessing outcomes, you will get it wrong,” says Bayhill Capital managing director Geoff Blount. “The key is to build portfolios that can withstand shocks, which is a lot less exciting.”
Blount says it is important not to take a view on the South African rand. “It’s so hard