While most South African investors tend to focus on whether they have adequate exposure to offshore assets in terms of quantity, less is heard about the quality of those offshore holdings. Here I define "high quality" in terms of the ability to attain excellent risk diversification, as well as to access the best possible opportunities for maximising your returns. Both of these are key ingredients for building a robust investment portfolio. Adding global investments to a portfolio has been widely shown to meaningfully reduce that portfolio’s risk characteristics without detracting from returns, helping to create an "optimal" portfolio when considering risk versus return. Thus it is somewhat surprising that, according to an IMF survey, most equity investors around the world are overweight in their own home market. Those in many emerging markets such as Turkey, Mexico, India and Russia have nearly 100% of their equity portfolios invested at home, while US and Japanese investors have ab...
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