Offshore investing: building your wealth

While SA and the JSE continue to struggle, economies around the world are beginning to recover from the impact of Covid-19.

At a recent BDFM Investment Dialogues webinar in partnership with Brenthurst Wealth, financial experts explored key global trends influencing how and where to invest. They also pinpointed the industries emerging as front-runners from the pandemic.

Offshore investing: unpatriotic or common sense?

Magnus Heystek, co-founder, director and investment strategist at Brenthurst Wealth, made a powerful case for investing your money overseas.

“If you’d invested your capital offshore on March 20 2020, with the rand trading at its weakest levels ever, you would still have managed to beat the local market,” he said.

“The JSE is the 20th largest stock exchange in the world. We have been overtaken by smaller stock exchanges like Tehran and Taiwan. SA has lost 250 listed companies since 2000. There are now almost the same number of listings as before 1994. If you compare the JSE with emerging markets, we are stone last. The real growth does not happen in SA.”

But can the average South African afford to invest offshore?

“You can invest in an offshore asset with as little as R500,” he said. “With a bit more money, you can buy a global ETF (exchange traded fund). Price is not really a factor; it’s understanding what you’re investing in. My children have built nice nest eggs with small but regular investments in those offshore instruments and now have investment exposure to companies such as Google, Apple and Facebook.”

First rule of offshore investing? Patience

Greville Ward, partner and head of HNW & International and Fundsmith Equity Funds, explained what it means to be a “global long-only, buy-hold fund”.

“We find the best companies in the world and invest in them for the long term. When you buy something to own for a long time, you want to make sure that the underlying assets are intrinsically growing a little bit every day.”

Ward shared Fundsmith’ s three-step investment strategy:

1. Only invest in good companies;
2. Don’t overpay; and
3. Do nothing.

What is a good company? “It makes a cash return above its cost of capital throughout the business cycle without needing to leverage or borrow money, and with the ability to reinvest in order to grow and compound,” he said.

“If you’re investing in things that are intrinsically growing every day, then you get a better result doing nothing because it costs you money to turn over your portfolio all the time and you have to keep having better ideas than you did last week.”

Where do you find the best companies? “We mainly invest in three sectors: old-line technology like Visa and PayPal, healthcare and consumer staples like toothpaste.”

Eight investment opportunities arising from Covid-19

Anthony Ginsberg, MD of GinsGlobal Index Funds, said the Covid-19 pandemic has accelerated opportunities for growth in ITEK, with HAN-GINS Tech Megatrend ETFs outperforming Nasdaq over the last two and a half years.

Key investment opportunities include:

1. Genomics;
2. Cyber security;
3. Social media;
4. Electric cars;
5. Cloud computing;
6. Robotics and automation; 
7. Digital entertainment, like Netflix and online gaming; and
8. Blockchain.

“Cloud computing and cyber security are winning in a big way and the work-from-home trend is continuing. Big tech companies such as Amazon, Microsoft and Google are all buying into the healthcare space,” he said.

Watch the full webinar below: