Navigating offshore investments beyond emotional impulses

Siobhan Simpson, Sales Manager, shares why investors should look past emotions and consider offshore options. Gain insights into when and how to go offshore, including portfolio construction and diversification tips. Learn the importance of a long-term view and how offshore assets can mitigate currency fluctuations, helping you make informed investment decisions aligned with your goals.

History doesn’t always repeat itself, and in the world of investments, past performance isn’t necessarily a guide to the future, and the same is true when it comes to the offshore and local debate.

Often, our motivations tend to be swayed by emotional impulses, characterised by sentiments like “Get me out of SA!... the lights are out.” It’s vital to look beyond these emotionally charged factors and explore the more profound and rational reasons why offshore investments have gained favour among investors, as we outline below:

Offshore assets have recently outperformed local ones (graph 1), and many investors suffer from recency bias, extrapolating their recent experience and assuming this trend will continue.
Additionally, in February 2022, the National Treasury announced the further relaxation of exchange controls, allowing investors to take 45% of their pension fund assets offshore, a significant increase from the previous limit of 30%. This change prompted many asset managers and investors to increase their offshore holdings.
Many South Africans are also concerned about the country’s negative sentiment, political uncertainty, and management (including rising debt levels), leading them to diversify their risk.

Read full article on: https://ninetyone.com/en/south-africa/insights/navigating-offshore-investments-beyond-emotional-impulses

October 05 2023 By Siobhan Simpson - Ninety One