PLEASE SARS,
MAY I HAVE
PERMISSION TO
GO DIRECTLY
OFFSHORE
“The phenomenon we call
‘home bias’ often limits South
African investors to locally listed
companies” says Steve Doidge,
director of RealFin Capital Partners.
“However, these corporates
comprise only 1.4% of the total
global market capitalisation of listed
companies, according to World
Bank data.”
Statistics indeed demonstrate the
existence of home bias and Doidge
says that in the South African
Collective Investment Scheme
industry, of the about R1.6 trillion
assets under management, about
90% of those are in ‘South African
Funds’ which are comprised of at
least 70% domestic assets.
Home bias is a worldwide
phenomenon, which can be
explained to a certain extent, says
Doidge. “For example, large pension
funds have liabilities that need to
be paid in domestic currency so
matching assets get invested in the
domestic market; and the same
applies to individual investors who
have local currency costs such
as mortgages.”
However, investors also need to
put their growth and capital assets
where the best risk-adjusted
opportunities exist, and this may
not be their home country. South
African investors are regularly
implored by local investment
houses to start considering the
remaining 98.6% of the global
investment universe available
to them.
RAND ROUT
NOTWITHSTANDING
That’s all very well, but with
August showing huge volatility
in global markets, and the Rand
behaving very badly – investing
offshore can be an overwhelming
investment decision.
Chris Gilmour, investment marketer
and analyst at Barclays Africa, says
that investors are understandably
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ISSUE 6 – SEPTEMBER 2015
unsure about going international
at the moment, but adds that
the broad underlying investment
fundamentals remain intact. “The
US economy is still growing steadily
and is expected to continue to do
so. The current market turbulence
could result in the decision to raise
US interest rates being delayed
from September 2015 to March
2016, which would be good for
equity markets.”
a local institution’s investment
allowance, the retail investor
does not externalise his offshore
investment. “He can never access
it directly overseas, and it must
always be brought back onshore
to South Africa. This contrasts with
the personal investment allowance
mechanism through which
investments are made d \