Invest on good advice, not emotion

Financial planners Warren Ingram and Theo Vorster, co-founders of Galileo Capital, say although we don’t know what the outcome will be of discussions about land expropriation or the Mining Charter, or when the economy will improve, it doesn’t make sense to send every rand out of the country because you believe the rand will collapse and stay that way forever. International factors often play a bigger role than our government’s policies when it comes to rand strength. If you have a negative view of the economy, they advise carefully increasing offshore exposure.

Earl van Zyl, Allan Gray’s head of product development, says the fund’s view is that you should hold 30%-50% of your portfolio offshore, yet most South Africans have less than 30% exposure.

This offers insufficient diversification, especially since SA’s share market comprises only about 1% of the world’s total listed market value and is dominated by large shares (the 10 largest shares on the JSE account for 55% of the FTSE/JSE All Share index, while the 10 largest shares globally account for just 11% of global index the MSCI world index).