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

Investing Offshore just got easier

Allan Gray introduce Rand lump sum offshore investments

Allan Gray has recently launched a new offering where investors can deposit local currency into Allan Gray’s bank account and Allan Gray will facilitate the conversion into foreign currency.

Investors can now invest into a new offshore investment from R20, 000, whilst existing investors can add to their investments from as little as R5, 000.

Benefits of investing offshore:

South Africa represents less than 1% of the world economy. Investing offshore allows investors to spread their investment risk across different economies and regions.
Investing offshore provides access to industries and companies that may not be available in South Africa.
The Rand has decreased in value by 8.2% to the US Dollar over the past five years. We expect the Rand to continue to depreciate in the medium to long term.
Investing offshore offers diversification benefits, reduced emerging market and currency risk as well as maintaining hard currency spending power.

Orbis SICAV Global Balanced Fund

The Orbis SICAV Global Balanced Fund seeks to balance appreciation of capital, income generation and risk of loss with a diversified global portfolio of equity, fixed income and commodity-linked instruments. The fund is suitable for investors who are looking for capital appreciation without being fully exposed to equity markets.

Fund returns for the Orbis SICAV Global Balanced Fund (US Dollars):

Since Fund inception: 8.2%

5 year returns: 5.7%

3 year returns: 11.4%

This is a fantastic opportunity for investors to diversify their investment and access offshore investment opportunities. For more information please contact us at 0027 41 373 0601 or you can get in contact with us here

July 2018: Tour De France and the case for investing offshore

Wow, Le Tour de France never fails to delight!

The cycling is a wonderful test of athletic endurance. Wow, isn’t the scenery beautiful? Le Tour takes the viewer on a spectacular journey as the route meanders through the most beautiful villages, passed quaint medieval churches, along mountain roads, farms and valleys. It is simply a magnificent sight!

Those of you who are watching, glued to your television sets, may have noticed that Marriott Income Specialists are sponsoring the television rights in South Africa. They are advertising a very attractive offshore product!

The Marriott First World Hybrid Real Estate Fund 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 Sterling income. With the majority of the return generated from the income yield, the investment outcome can be anticipated with a reasonable degree of certainty.

Here are the latest performance figures:

Marriott’s First World Hybrid Fund Returns

Drone footage of three key properties can be viewed via this link First World Hybrid Property video. The properties featured in this footage are:

Crown Packaging Manufacturing – Leicester
Keepmoat – Lakeside, Doncaster
Wickes – Grimsby, East Lincolnshire

When is the right time to invest offshore?

The spreadsheet attached allows investors to input their capital available and to see how the strengthening or weakening of the currency will affect their investment. Over the past 10 years the South African Rand has depreciated against Sterling on average by 2% per year. Were this to continue over the next 10 years then £1 British pound would cost a South African investor more than R21.

Expected investment returns

Give us a call to find out how you can invest into this attractive real estate fund and earn a Sterling-based income!