International investments may sound like something that’s reserved exclusively for the jet-setting millionaires among us. In reality, the opposite is true and international investing may be more accessible than you thought.
When investing internationally with a trusted partner or resource, the opportunities and potential rewards far outweigh any fears you may have about sending your hard-earned money into the big, wide world.
Here’s what you need to know about how to make international investments from South Africa...
What benefits do international investments offer?
If you choose not to invest offshore, this limits you to the South African market, which represents only around 1% of the world’s total listed equity market capitalisation. In other words, you’re missing out on 99% of the opportunities to grow your money.
Investing offshore gives you a greater chance of building a balanced, diversified portfolio, which is a key investment principle for reducing risk. It also provides access to better interest rates, stronger economies and different industries. That’s why foreigners invest in South Africa, and why South Africans should invest overseas.
What types of international investments are there?
International investing can be an effective way to diversify your equity holdings. Plus, you literally have a whole world of opportunities when you go the offshore route.
- You can purchase shares from global companies all the way from the States to China - the latter accounting for roughly half of all global e-commerce spending, along with a retail market looking poised for substantial long-term growth.
- Then there are offshore unit trust funds, which are priced in rands but the capital is invested offshore, giving you foreign currency exposure and global diversification.
- Exchange traded funds (ETFs) are another option; great if you prefer to buy shares in a bit of everything. If it’s a foreign rand-denominated fund, you’ll invest in rands and be paid out in rands, but you’ll get the same exposure as if you’d sent your money overseas.
As IFSA’s Frikkie van Loggerenberg explains, each route has its own set of terms and conditions, potential upturns, and challenges:
“There may be various avenues you can take to gain international exposure. But having a local financial manager who can help you administrate offshore investments is always first prize.”
How do I navigate the international investment space?
The international investment landscape is extremely diverse. Sometimes, that is where things can get a little confusing.
In South Africa, you have just under 200 listed shares that you are able to invest in, with various instruments you can use to acquire shares. The moment you look to the international market, you have millions of instruments at your disposal, as Van Loggerenberg explains:
“As part of building a resilient, well-diversified portfolio, it is extremely important to ensure international exposure. Consequently, it is equally vital to select the right manager to help you navigate the international investment space.”
What are my options at a glance?
South Africans have two options when it comes to offshore investments: direct or indirect.
- Direct investing is when you take your money overseas, going through the correct exchange controls and clearances, opening a bank account in a foreign country, and sending your rands to become anything from dollars and pounds to yen and euros.
- Indirect investing means that even though you have foreign currency exposure, you invest in rands, your returns are in rands and your money never actually leaves South Africa.
How can IFSA help me invest globally?
In an uncertain world, financial diversification – especially globally –should be mandatory. From high net-worth investors to independent financial advisers – at IFSA, we offer a range of offshore investment opportunities, designed to solve our clients’ specific challenges.
Because we are experts in private equity, we serve as a trusted intermediary for investors looking for high returns with low market volatility. While not without risk, private equity can create unique value for investors that differ from traditional investments like publicly traded stocks, bonds and other funds.
Based in Mauritius (under Licence of the FSC in Mauritius), our international fund invests in global opportunities. Returns are measured in USD, and the typical time horizon is seven to 10 years.
Get in touch: IFSA can help you get exposure to international markets
Are you looking to diversify your portfolio outside of South Africa?
IFSA Private Equity is a global investment management firm that serves the South African market. Specialising in private equity, the team has over 60 years of combined experience and is committed to helping as many people as possible plan for their financial future, including retirement.
Irrespective of what your financial goals may be, IFSA is invested in seeing you prosper for the long run.
To find out more about how you can acquire international exposure to diversify your investment portfolio, contact us for a free personal consultation.
IFSA (Pty) Ltd Registration No. 2000/005153/07 An Authorised Financial Services Provider Licence No. 43337