Why the Ashburton Global Leaders ZAR Equity Feeder Fund is proving popular with South African investors seeking offshore investments

As economic worries persist and after years of a sluggish Johannesburg Stock Exchange (JSE) performance, many South Africans are looking for better returns from top performing offshore investments and diversification into hard currency assets. 

But some are unable or prefer not to invest in offshore funds.

In response, we have made investing in leading markets hassle free through feeder funds, such as the Ashburton Global Leaders ZAR Equity Feeder Fund. 

Through the fund, South Africans can access offshore investments without having to utilise their offshore allowance. And it can also be invested in through tax free savings accounts (TFSAs). The fund has a minimum lumpsum investment of R5 000, or R500 by monthly debit order. 

What makes offshore investments attractive?

The Ashburton Global Leaders ZAR Equity Feeder Fund is the rand-based feeder of our successful Luxembourg-domiciled, dollar-based Ashburton Global Leaders Equity Fund (the principal fund). 

Through the feeder fund, South African investors can access a high quality, concentrated portfolio of up to 25 of the world’s most prominent international mega cap stocks such as Alphabet, Visa, Microsoft and Nestlé. These stocks have a global presence and are typical constituents of a major index such as the Financial Times Stock Exchange (FTSE) or the Dow Jones.

The principal fund invests in industry leading companies which are characterised by quality attributes such as improving cash return spreads, relatively high predictability of earnings and management and balance sheet criteria. 

Through the careful selection of market leading stocks in attractive industries, the principal fund aims to deliver sustainably compounding total returns over the long term.

Over the past five years, the principal fund has delivered around 7% annualised return in USD and 19.8% year-to-date in USD (October 2019). Considering the biggest sector exposures, the top three are health care at 23%, consumer staples at 20%, followed by information technology at 14%.

While sector diversification within the portfolio is important, the fund also benefits from geographic diversification which is important for investing offshore as a South African. 

Of the major geographic holdings, the United States makes up the largest portion at 50%, followed by Europe excluding United Kingdom (UK) at 26%, the UK at 19% and Asia excluding Japan at 3%. Although the underlying companies have exposure to many other markets.