Francois Lombard, Head: Investment Distribution at Momentum Distribution Services
In the ever-evolving world of investments, one mantra remains as steadfast as a vuvuzela at a soccer match: diversification, diversification, diversification. South African investors increasingly recognise the pivotal role offshore investments play in crafting resilient and growth-oriented portfolios.
South Africa accounts for less than 1% of the global market. This limited exposure can be as restrictive as trying to braai without wood. By venturing offshore, investors can tap into high-growth sectors such as technology, biotechnology, and renewable energy, industries that might feel as foreign as a rugby match to a soccer fan but offer substantial growth potential.
The perks of packing your investment bags
- Geographic diversification: Spreading investments across various countries reduces reliance on the South African market, mitigating risks associated with local economic downturns or political instability.
- Asset class diversification: By spreading investments across equities, bonds, real estate, and commodities, investors can mitigate risks associated with any single asset’s underperformance.
- Sector diversification: Within each asset class, it’s wise to diversify across various sectors. This ensures that a downturn in one sector doesn’t disproportionately impact the entire portfolio.
- Currency hedging: Holding investments in multiple currencies can act as a buffer against currency volatility. For South African investors, this means that assets held in stronger currencies, like the US dollar, can help preserve the portfolio’s value if the rand weakens.
- Access to global markets: Through international markets, investors can benefit from global economic growth and opportunities not available locally.
At Momentum Wealth International, we know that investing offshore can
seem tricky.
With our true offshore investment platform, more than 20 years of
delivering excellence, and the latest technology at your fingertips, we make it a personalised and exciting journey for you and your clients.
Speak to your Momentum Consultant today to find out more
about a world of investing possibilities, or visit momentum.co.gg.
Momentum Wealth International Limited is licensed by the Guernsey Financial Services Commission to conduct Investment Business. Momentum Wealth International Limited is an authorised Financial Services Provider pursuant to the Financial Advisory and Intermediary Services Act No. 37 of 2002 in South Africa. Momentum Investments is part of
Momentum Metropolitan Life Limited, an authorised financial services (FSP6406) and registered credit (NCRCP173) provider.
Strategies for financial advisers
To effectively use offshore opportunities for clients, financial advisers should consider the following approaches:
- Understand client goals: Assess each client’s financial goals, risk tolerance, and investment horizon. Tailor the offshore allocation to fit their long-term needs and objectives, whether it’s wealth preservation, growth, or funding international education.
- Stay current with regulations: Understanding the nuances of the yearly R1 million discretionary allowance and the broader R10 million investment limit is crucial to guide clients through compliance and optimise their offshore exposure.
- Focus on tax efficiency and holistic planning: Collaborate with tax and legal experts to structure offshore investments that optimise tax outcomes and integrate seamlessly into broader estate planning.
- Educate clients: Use relatable analogies to demystify complex concepts like currency hedging, tax efficiency, and global diversification. Clear communication builds trust and empowers clients to make informed decisions.
Offshore diversification remains a cornerstone strategy for South African investors aiming to build resilient and growth-oriented portfolios. By embracing global opportunities and adhering to informed investment practices, financial advisers can guide their clients towards achieving their financial objectives amidst local and international market dynamics.
For investors looking for guidance in navigating offshore investment strategies, working with experienced financial professionals can make all the difference. Wealth managers with expertise in offshore structuring, estate planning, and tax considerations can help investors make informed decisions tailored to their long-term objectives. For more information on our offshore investing solutions, visit Momentum Wealth International at momentum.co.gg.