Simple offshore exposure – Moneyweb.co.za

Despite how the South African market has opened up over the last 20 years, many South Africans still see investing as a purely local exercise. The bulk of their assets are held in South African unit trusts, local real estate and deposits with local banks.

To a large extent this has to do with how this countrys economy was historically isolated from the rest of the world. Exchange controls made it very difficult to take money offshore, and so investing in international assets was just not seen as an option.

Most of us dont think globally, says Helena Conradie, the CEO of Satrix. Thats because the products havent been available, and there were a number of hurdles to investing offshore.

That has however changed significantly with the relaxing of exchange controls and a wider range of international products becoming available on the local market. At the same time, perceptions around investing offshore have also changed.

As much as in the past there was a perception that buying stocks on the JSE was only for the wealthy, there was also a belief that to invest offshore you had to be super wealthy, says Conradie.

But that mental hurdle is being overcome as more product providers offer much easier access.

Increasingly, investors are also coming to understand the benefits of not having all of their wealth concentrated in South Africa. They are appreciating the need for diversification.

All South Africans need some offshore exposure in their portfolios, Conradie argues. While South Africa has world class companies, there are many industries, economic regimes and currencies you are simply not able to access by keeping all your capital in domestic assets.

At the same time, investors are looking to reduce risk of being exposed to just one country, particularly with the levels of political uncertainty that are prevalent not just here but in many parts of the world.

The importance of diversification is being reinforced every day by just looking at the reality across the globe, says Conradie. The political environment across the world, not just in emerging markets, shows how you cant afford to have all of your money in a single country.

Widening the net

International investment opportunities can broadly be divided into developed and emerging markets. Conradie believes that its important for investors to consider both.

Developed markets offer more stability in terms of their established economic systems, although not necessarily their politics, she says. But they also have less potential for growth, which is why investors should consider some exposure to emerging markets. These are the worlds up-and-coming economies, and investing there gives you the opportunity to grow with them.

Emerging markets may also offer exposure to new growth industries that are not found in developed economies.

If you take an overall view of the world, each country has a major industry, a major product, and a culture that drives it in a certain way, Conradie notes. No place is the same, and that diversity is what you want to get exposure to.

Getting access

The growing appreciation of international investments amongst South African investors has been happening at the same time that index-tracking products have become more widely available. This has given investors an attractive way to gain offshore exposure.

Index trackers are great options because they are broad based, cost effective and there are choices available to suit all needs. says Conradie. You get exposure to world class companies, but you dont have to choose them yourself. You are also diversified in terms of country exposure, but you dont have to pick those countries. The index does it for you.

Satrix is currently finalising the listing process with the JSE and will soon be launching three international exchange-traded funds. These will give investors a way to access these markets as simply as buying a local share, and without having to deal with any exchange control regulations.

The three funds are the Satrix MSCI World ETF, which offers a broad exposure to developed markets; the Satrix S&P 500 ETF, which tracks the iconic large-cap index in the US; and the Satrix MSCI Emerging Markets ETF, which includes companies in markets such as China, South Korea and India.

These give investors a very simple way to broaden their investment universe.

To access these ETFs is very simple, says Conradie. You could buy your offshore exposure online via a platform like SatrixNOW while enjoying a cup of coffee. And in keeping with our purpose of democratising investing, there is no minimum investment amount and no annual platform fee when you invest via SatrixNOW.

This article was brought to you by Satrix.

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Simple offshore exposure - Moneyweb.co.za