Strong interest in offshore equity funds

The Johannesburg Stock Exchange (JSE) All Share and Top40 indices have made a series of record highs in the recent months.

This has not deterred South African investors from continuing to invest apace in hard currency global equity funds such as the JSE listed Ashburton Global 1200 Equity Fund of Funds ETF and the Ashburton Global Leaders Equity Fund.

While many South African listed shares, and particularly so called ‘SA Inc’ shares - like banks, retailers and local Real Estate Investment Trusts (REITS) - have rallied from very oversold levels, this does not guarantee future returns.

Weak local economic fundamentals are a major contributing factor for investors’ preference for offshore markets. South Africa faces economic and industrial policy uncertainty of land expropriation, inflexible labour laws, among other populist pressures. 

Add to that the current strength of the rand, which has helped drive up local shares and create a greater sense of confidence. A strong rand has provided South African investors with a window of opportunity to convert rands to hard currency and invest offshore thereby globally diversifying their portfolios.

Many South African investors continue to take advantage of the weaker dollar, taking the long-term view on the rand.

As a locally listed, passive option, the low cost JSE listed Ashburton Global 1200 Equity Fund of Funds ETF has continued to grow in popularity having recently reached R1 billion worth of assets under management in just over three years since its launch.

It provides cost effective, geographic and hard currency diversification in one simple JSE listed investment that does not require the use of offshore allowances.

Another appealing offshore investment is the actively managed Ashburton Global Leaders Equity Fund. It is designed for people wanting to invest long term in a concentrated portfolio of the world’s most prominent companies, household names and industry leaders such as Microsoft, Visa and Alphabet.

The Ashburton Global Leaders Equity Fund gives investors access to mega-cap businesses, each worth over US$20 billion, with a global presence and constituents of the major indices such as the FTSE, Dow Jones or Nikkei.

Whichever the route to offshore, it makes sense to invest in leading companies, technologies and industries, exposure to which is often not available on the JSE.