Farmers Review Africa Sept/Oct 2018 FRA - September - October 2018 digital 5 | Page 32

FEATURE
investments offshore is to achieve
the benefits of diversification. If you
spread your capital across more than
one type of investment, you reduce
the overall risk to your portfolio, often
resulting in a greater overall return.
If one component of your portfolio
performs poorly over a certain period,
it is often the case that another part
may perform appreciably over that
same period, thereby counterbalancing
the losses to your total portfolio.
Another reason to invest offshore is to
gain exposure to different industries
and regions that either aren’t available
on the Johannesburg Stock Exchange,
or are only available to a limited
degree. Examples of industries are
biotechnology, internet and robotics,
while regional examples are Asia,
Europe and North America.
30 |September - October 2018
A further benefit of having an offshore
component to your portfolio of
investments is the hedging benefit that
you achieve in the event of the rand
weakening against hard currencies
such as the US dollar. If the rand
continues to weaken, as has been the
case over the past years, the offshore
component of your portfolio would be
worth more in rand terms. Successful investing is often about
discipline and patience, and having
the control to not panic or change your
investment strategy based on market volatility.
Goal-based investing is about aligning
your investments with your life.
Performance is measured by the
progress you have made towards
achieving your stated goal. And risk is
viewed as failure to reach your goals.
Caveats to keep in mind
Bearing this in mind, it is important
to consider offshore investments as a
core part of your long-term investment
portfolio. It is also important to invest
offshore consistently rather than in
reaction to dips in the rand or in
response to news headlines.
Decide how much of your portfolio
should be invested offshore, with
the help of an independent financial
adviser, and work towards achieving
your goal. “A global portfolio comes with the
added benefits of being able to invest
in a far broader opportunity set, and
having unrestricted access to your
funds from anywhere in the world”,
concludes Japie.
“Consider also, with the help of your
financial adviser, the appropriate way
to build your offshore portfolio, such
as direct investment, unit trusts or
structured products, or a combination
of investment vehicles.”