offshore investing Archives - Page 2 of 4 - Kevin Mills Financial Services

August 2020 – Fund update

Marriott First World Hybrid Real Estate Fund is re-opening

First World Hybrid Real Estate Plc is a real estate investment company that invests in a combination of direct real estate and listed real estate investment trusts.

The objective of this Fund is to combine the benefits of direct and listed First World real estate to generate a reliable, predictable and growing income. With the majority of the return generated from the income yield, the investment outcome can be anticipated with a reasonable degree of certainty.

In the five months since trading was temporarily placed on hold, the Fund has performed well given the unprecedented uncertainty due to the COVID-19 impact on the property market. During this period the direct property portfolio saw:

Growth in rental income
No rental write-offs
An increase in the overall portfolio valuation
The Fund has continued to pay quarterly dividends

Despite the market uncertainty and volatility, the Fund has performed well over the last 12 months providing investors with a return of 6.4% in Sterling. The outlook for the First World Hybrid Real Estate Fund remains good due to its emphasis on distribution warehousing. This sector has benefitted from strong occupational and investment demand.

The Fund’s 4.5% income yield is attractive in an investment environment where income returns are increasingly hard to come by, and especially when compared to a 10 year UK bond yield which is now yielding 0.2%. Investors in the First World Hybrid Real Estate Fund can remain confident that the Fund will continue to serve them well over the longer term and given the First World Hybrid Real Estate’s emphasis on:

High-quality distribution warehouses
Robust tenants
Long term leases

The portfolio will continue to provide investors with between 4.5% – 6.5% in Sterling. For investors looking to diversify their investment portfolios, the First World Hybrid Real Estate Fund provides attractive returns in a first world currency and very little to no correlation to the world stock markets.

For more information or to invest in the First World Hybrid Real Estate Fund please contact Kevin or Greg.

July 2020 – Offshore Investing

Time to invest offshore?

Investors often pose the question “when is the right time to take money offshore?” Foremost in their minds is what is the current Rand/Dollar exchange rate is and what happens if the Rand strengthens. Although we cannot predict short-term currency movements, history suggests that over time the Rand will continue to weaken against the major currencies of the world.

In a recent webinar we hosted, Marriott’s Chief Investment Officer, Duggan Matthews presented Marriott’s 5-year exchange rate expectation.

In trying to address when the best time to invest offshore is we have tried to address how the currency will impact your investment over a 5-year investment horizon.

What happens if the currency strengthens or weakens

In the recent Budget update, the Finance Minister highlighted the daunting task facing South Africa as a nation as it tries to balance its debt obligations, maintain/increase current spending levels all the while whilst trying to tackle corruption and irregular expenditure.

On the 27^th March 2020, Moody’s cut South Africa’s international credit rating from Baa3 to Ba1, which is sub-investment grade and commonly referred to as “junk status”. The harsh effects of the COVID-19 pandemic are likely still to be felt with South Africa expected to record its worst economic performance in recent history.

Is it not time for investors to consider diversifying their investments and seeking investment opportunities in different markets? South Africa represents less than 1% of the global economy. Investing offshore allows investors to spread their investment risk across different economies and regions. It also provides access to industries and companies that may not be available in South Africa.

Perhaps the pertinent question is not when is the right time to be investing offshore but why not.

Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons. And that we will do.” Warren Buffett

June 2020 – Update from Marriott

Local Bonds, Offshore Equities

On Tuesday last week, Louwrens Coetzee and Duggan Matthews of Marriott Asset Managers presented their outlook for local and offshore investments.

Louwrens opened the presentation with the implications of the recent interest rate cuts and what this will mean for local investors who are seeking an income from their investments. Investors will need to be aware that yields have declined and this will lead to a reduction in the level of income they are receiving. The Marriott Core Income Fund has continued to provide investors with a reliable, predictable and above inflation level of income over the past 5 years.

In the second part of the presentation, Duggan provided insights into where Marriott is continuing to find excellent investment opportunities offshore.

Duggan explained how Marriott’s investment philosophy of selecting companies that are able to grow and increase their dividends will become even more relevant now, as we face up to the uncertainties of the post-COVID-19 world.

Duggan also shared their annual return expectations for the Marriott International Investment Portfolio (IIP) for the next five years.

It is Marriott’s belief that the best investment opportunities continue to remain offshore and investors looking for long term capital appreciation should consider investing in quality companies that will emerge from the current crisis in a stronger position than many of their peers.

For those investors who missed out on the presentation and would like a copy of the slides, please contact the office directly for a copy to be sent to you.