Blue Chip Issue 78 - Jan 2021

COLUMN
The role of offshore investments
for South African investors
Sound advice by Florbela Yates, Head of Momentum Investment Consulting
In an economy that is already struggling
to deliver economic growth and low
returns from the majority of South
African asset classes, it is no surprise that
more and more South African investors
are looking for investment opportunities
offshore in a bid to maximise their
investment returns.
At Momentum Investment Consulting,
we believe in building diversified portfolios
across both local and global asset classes
that deliver on our outcome-based
investing philosophy. With this approach
our clients can invest in portfolios that are
best aligned to their personal goals. By
articulating the desired goal, as well as a
relevant time horizon, we believe it’s easier
for clients to remain invested and prevents
them from panicking when markets fall
and making short-term decisions that
could have dire consequences for their
long-term wealth.
Partnering with a reputable financial
adviser with a full overview of their assets,
goals and tax status, allows clients to
determine what their short-, medium- and
longer-term needs are. This, in turn, makes it
easier to identify which portfolios are most
suited to them, including the appropriate
blend of local and offshore assets.
The starting point in our investment
process is to determine the appropriate
allocation to each asset class, which then
allows us to determine the appropriate
allocation to local and offshore investments.
The local and London-based teams
then select the investment managers,
depending on whether the assets are
managed via asset swap (but invested
locally) or true hard-currency portfolios
domiciled elsewhere. This process allows
us to identify and employ specialist asset
managers around the globe, resulting in
globally diversified portfolios with better
investment outcomes for all our clients.
While 2020 was a uniquely challenging
year, we have remained steadfast in our
focus on managing clients’ capital. As
Ferdi van Heerden, CEO of our Momentum
Global Investment Management business
explained: “Where opportunities have
presented themselves, we have sought
to take them. This not only applies to the
client portfolios we manage but also in
our own business. Our recently announced
acquisition in the UK of Seneca Investment
Managers demonstrates our commitment
to expanding our global investment
capabilities. This is indicative of our
investing approach: we take a long-term
view and look through periods of intense
uncertainty to the opportunities, in the best
interests of our clients. We are committed
to delivering on our clients’ investment
goals, and with this acquisition, we now
have an even stronger team to back it up.”
Florbela Yates, Head of Momentum
Investment Consulting
2020 serves as a reminder of the
difficulties in forecasting. We continuously
spend time revaluating our expectations
for the future, rather than doing so as part
of a once-off exercise in December each
year. Still, we are also realistic about the
accuracy of those views, and hence we
build resilience into our portfolios.
Valuations across many asset classes
are high today, but clients need to look
through the current period of depressed
earnings to the prospects for companies
in the future.
As things stand, 2021 promises to be a
year of strong recovery around the world.
While markets have gone some way
towards discounting that already, there’s
considerably more upside potential if we
see a successful vaccine rollout. Clients
should ensure they have enough exposure
to the related ‘value’ stocks, rather than
being overly concentrated in the winners
of the pandemic and the last few years,
namely the US mega-cap tech stocks.
We expect more of the same responses
from policymakers in providing liquidity
and financial support in 2021, twinned with
a gradual reopening of economies and
the businesses that operate within them.
This should support growth asset classes
including global equities, corporate debt,
property and infrastructure. Volatility will
remain high, and we continue to spread
clients’ capital across a range of diversifying
asset classes, sectors and regions.
A more confident forecast for next
year is that clients will continue to pay
more attention to sustainability-related
considerations. Greater integration of
environmental, social and governance
(ESG) research into investment teams
and processes comes up in almost every
conversation we have with asset managers.
Responsible investing practices have
always resonated with our outcome-based
investing philosophy and the alignment of
our clients’ long-term goals to positively
influence the world they will retire to.
We support responsible investing to
help create investments that are good for
clients and the world we live in. Because
when it comes to sustainable investment
growth, for us it’s personal.
18 www.bluechipdigital.co.za