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Why global investments are critical for local portfolios

SOUTH AFRICA’S MARKETS ARE A SMALL FISH IN A FAR LARGER GLOBAL INVESTMENT POND

2022 WAS the most challenging year in over a decade for most global investors. Strategies that had been hugely successful for many years stopped working, and overnight it got even harder to be above average.

This backdrop amplifies the importance of having a broad universe within which to pick what is likely to work in the future. More choice and good selection will dramatically improve the likelihood of producing good returns at acceptable levels of risk. Ultimately, global investing will be a key contributor to future portfolio outcomes and an important differentiator between funds.

SA investors will be aware of the amendments to offshore limits for domestic funds in last year’s National Budget. Local unit trusts can now invest 45% of their assets outside of SA. This represents a 50% increase in the global allowance, and is a big deal for asset allocation and future fund outcomes. This is a very positive development for local managers with proven global capability.

The increased limit will benefit local clients in two key areas.
– Firstly, in terms of risk management, there are more opportunities to diversify portfolios …

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