South African investors can now further diversify investments internationally, following an increase...
South African investors can now further diversify investments internationally, following an increase in the personal offshore allowance from R750,000 (£69,300) to R2m announced in the budget last month by finance minister Trevor Manuel.
Peter Lucas, global investment strategist at Ashburton, said: "We recommend that investors, wherever they may be based, should diversify their investments internationally to effectively manage their risk return ratio.
"There is no magic formula in terms of the mix of domestic and offshore investment that suits all. Every investor's needs are different as are their attitudes to risk.
"It is important to remember that the main aim of diversification should be to manage risk rather than maximise return. The rand is strong and many South Africans are sitting on good profits from domestic investment in either local companies or property.
"International markets are performing strongly with many money managers having rediscovered their appetite for equities. While there are risks out there and we may see some correction in equities over the next few months, global growth should continue to generate good investment returns."
However, Lucas warned investors should err on the side of caution. Using the UK as an example, he said, when FX controls were abolished in the 1960s, soaring oil prices at the time produced a strong sterling, which hindered British industry, from an export perspective for some time.
He pointed out that strong commodity prices down the line could do the same for the rand and result in even tougher market conditions for South African exporters.
South African personal offshore allowance increased form R750,000 to R2m
Investors should diversify their international investments
A stronger rand could hurt South African exports
£300bn of liabilities
View from the front row
Transfer from occupational scheme
Appointed by FCA and PSR boards