Treat offshore as part of diversified strategy
Offshore investments are just as important as they have ever been and are no more, or less, important in the current environment, according to business analyst at Allan Gray, Radhesen Naidoo. Typically what tends to
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happen is that as soon as the rand weakens, investors want to head offshore. However, the rand is only one of many variables to consider when deciding on the right time to invest offshore. Equally as important is to consider value in the market. Investing offshore at an extreme point including
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when value is high and the rand is weak is not ideal. It s
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always the price you pay today that is the key determinant of future returns.
The decision to invest
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offshore should not be a reactionary one but should rather match your long-term investment goals. Treat the offshore component of your investment portfolio as part of a diversified investment strategy rather than flavour of the month. When offshore is part of your investment plan from the outset you have more options and more flexibility,” he adds.
Given the plethora of investment options, it s
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important to do your research. Pick a manager you trust and are comfortable with. Make sure you understand their investment strategy and how
they are remunerated,” he says. Making these decisions on your own can be tough. Talking to an independent financial adviser to help you make the right investment decisions for your particular risk tolerance is a good idea,” says Naidoo.
Orbis Investments is Allan Gray s offshore investment
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partner. Orbis shares our
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investment philosophy which is to ignore market sentiment and buy shares in companies its research process indicates are undervalued,” explains Naidoo. Their investment strategy is based on the idea that the most lucrative ideas are often found in unpopular or ignored areas. To unlock the value from these ideas, taking a long-term view is important more so today.”
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Investors are becoming increasingly risk averse and safe investments, he says, are frequently being confused with popular investments. While big tech stocks in the US are the flavour of the month, Naidoo says it is important to consider markets have become quite heated in recent months. The S&P is at an all-time
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high but at the same time there is significant dislocation in the US market. Remove the large tech giants like Facebook, Amazon, Apple, Netflix, Google (and Alphabet) and Microsoft, and the S&P s performance is
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less impressive,” he says.
In a similar vein, in SA if you remove the few top performing stocks, the majority of stocks on the JSE have not performed as well or recovered to the same degree as those top performers.
We take a different, longerterm view of offshore investing,” says Naidoo. Orbis investment
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decisions are driven by the relationship between price and fundamentals. Their analysts are busy evaluating new opportunities that have arisen amid the extreme volatility.”