UP AND AWAY

The Citizen (KZN) - - BUSINESS - No longer just the US In­vest­ing in the fu­ture Off­shore in­vest­ment in rands

and BMW can be pur­chased di­rectly. Off­shore in­vest­ments have tra­di­tion­ally been cen­tred around de­vel­oped mar­kets, which makes sense, as SA as­set prices are highly cor­re­lated with emerg­ing mar­ket as­set prices, but en­joy only mod­er­ate (even low) cor­re­la­tions with de­vel­oped mar­ket as­sets.

Some­thing not of­ten con­sid­ered, how­ever, is how SA as­set prices cor­re­late with fron­tier mar­kets.

By sim­ply look­ing north of our bor­ders, the di­ver­si­fi­ca­tion ben­e­fit will be even greater than in­vest­ing in the US. The MSCI South Africa has an only 0.2 cor­re­la­tion with the MSCI Africa (ex-SA). The­matic in­vest­ing is a way to make in­vest­ment de­ci­sions based on pre­dic­tions about trends, rather than on past per­for­mance of the mar­ket or the fun­da­men­tals of a spe­cific com­pany. By dig­ging a lit­tle, you can iden­tify the com­pa­nies that could change the world, and pro­vide you with at­trac­tive re­turns.

While this sounds good, it’s dif­fi­cult to self-iden­tify the best way to ben­e­fit from changes in the way that so­ci­ety op­er­ates. In this case, one can con­sider in­vest­ing in the­matic ETFs fo­cus­ing on ar­ti­fi­cial in­tel­li­gence, ro­bot­ics, me- di­cal ad­vances, and even just the dig­i­tal econ­omy.

Many op­tions are now avail­able which don’t re­quire us­ing your yearly Re­serve Bank-stip­u­lated off­shore al­lowance. SA-based in­vestors can look at in­ward-listed shares on the JSE or ETFs and unit trust funds.

With geopo­lit­i­cal risk ris­ing, cur­rency volatil­ity in many emerg­ing mar­kets, and growth ar­guably peak­ing in de­vel­oped mar­kets there’s still a case to be made for putting your eggs in as many bas­kets as pos­si­ble.

Chan­tal Marx is head of re­search at FNB Wealth and In­vest­ments

Pic­ture: Bloomberg

The rand strength­ened against the US dol­lar this week amid broad green­back weak­ness as in­vestors be­gan to worry about the im­pact of higher US in­ter­est rates on the US econ­omy, re­ports NKC Re­search.

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