STOCKS THAT THE GLOBAL MAN­AGERS LIKE LO­CAL FUND

Finweek English Edition - - COVER STORY | OFFSHORE INVESTING -

Lloyd Gedye

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

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