Balance brings peace of mind
In recent years more South Africans have opted to have offshore exposure in their portfolios and this affords them some protection when the rand takes a fall.
Janina Slawski, director of marketing and distribution at Old Mutual Investment Group, says a trend that has emerged over the past few years is that South African equities have become increasingly internationally orientated.
“It is difficult to make a decision to only invest in South African equities or only offshore equities when the two are very much linked in today’s market.
“Despite the turmoil in SA recently the stock market has not done anything particularly dramatic in response as many of the locally listed companies have strong offshore income streams and provide investors with currency hedging.
“Therefore, keeping a balance between South African investments and offshore exposed assets is an important part of people’s investment decision making,” Slawski says.
She says maintaining the appropriate balance between local and offshore exposure is one of the reasons to select a good multi-asset class manager and then trust their professional decisions in making the right asset allocation.
Herman van Velze, head of equities at Stanlib, says in terms of Stanlib’s equity portfolio it is well diversified and does not need to make major adjustments to cater for currency movements.
“We minimise the risk of currency fluctuations and use appropriate stock selection to create the outperformance that we seek,” Van Velze says.
“Being balanced and having sufficient diversification in the portfolio is essential. A properly constructed portfolio provides peace of mind and you do not have overly concerns about the macro conditions over which you have no control.”
He says where investors already have well constructed portfolios they can grow their offshore assets on the same basis as they do all their investments and there is no need for dramatic repositioning every time there is a shift in the exchange rate. “Now is not the time to make any panic buys, especially as the rand is weaker and acquiring offshore assets would be expensive.”