Offshore Investing For Beginners

A quick 101 on moving money beyond our borders

- Dayle Kavonic

South Africa’s current economic climate has everyone and their uncle talking about getting cash out of the country. But what does that actually mean? How does it really work? And is it even a good idea? To shed some light on the offshore investing landscape for those of us who are still a little green in this department, we spoke to Kondi Nkosi, head of business development for the Gauteng branch of multinational asset management company Schroders. Here are his invaluable insights.

SHOULD YOU INVEST OFFSHORE?

The short answer is, yes. But not because you’re anxious about the weakening rand. Offshore investing should be considered first and foremost because it helps you to diversify your portfolio across different investment instruments, markets and even managers, which is vital for managing risk and potentially enhancing returns.

SA’s Johannesburg Stock Exchange (JSE) accounts for just 1% of companies listed globally, so if you’re not investing some of your money offshore, you’re missing out on 99% of the opportunity set. By going abroad you get access to some of the biggest and most successful companies and markets in the world, as well as lesser-known businesses that have really good growth prospects. You also broaden your exposure to sectors that aren’t as accessible in the local market, like the aerospace and medical device industries.

Because the key benefit of investing offshore is diversification, it’s ineffective to try to time investment decisions perfectly. Offshore investment should be considered as a portion of your investment portfolio regardless of where you find yourself in the economic cycle.

IS OFFSHORE INVESTING ONLY FOR THE SUPER WEALTHY?