Using unit trusts to invest offshore

How can I increase my offshore investment exposure through unit trusts?

Name withheld

Anet Ahern, CEO at PSG Asset Management, Cape Town, responds: First, you need to remember that offshore investment should always be considered

as part of an overall balanced portfolio. The right level of diversification will always depend on each investor’s unique needs and risk profile, and it is best to consult with a financial adviser as there may also be alternative legal and financial planning effects for you to consider.

Where you want to consider additional offshore exposure for your discretionary investments, I would recommend that you be particularly selective about where you invest at this time.

We have seen some markets, and specific shares and sectors within these, (like mega-cap tech stocks in the US) which have traded at extreme valuations, and subsequently pulled back sharply. However, we do not think that all imbalances have fully unwound as yet.

As such, we anticipate further volatility, and “buying the dip” on what you feel you may have missed out on (the past decades’ winners) may not be the obvious course of action, because large scale changes in the investment landscape will require investors to think differently and not just invest in what has worked for a long time … up to the end of last year. We think the environment that lies ahead will look materially different to that of the past. Make sure your offshore portfolio is properly diversified with investments that are more likely to withstand or benefit from the challenges of higher inflation and higher interest rates.

Almariè Büchner, adviser at PSG Insure, Centurion: Although short-term insurance is viewed as a grudge purchase by some, it should be considered by anyone who has valuable assets or items that they cannot afford to replace when disaster strikes. Short-term insurance offers a safety net.

It provides a measure of security when unexpected events arrive, be they man-made or natural occurrences. Insurance helps to manage your risk by covering and protecting your assets and valuables in the unfortunate event of damage, therefore, enabling you to save thousands of rands that would have been needed to replace the lost or damaged items.

If you don’t have insurance in place, you need to save an amount equivalent to that of your valuables to replace them, and in most cases saving even huge amounts a month will not enable you to replace the loss due to the increased value of items and other factors affecting the value of an item or asset.

Speak to a financial adviser to help ensure you select the right level of cover, tailored to your needs.