Cape Town – The continuous devaluation of the rand is making local investments, irrespective of how good they are lose value over time in international terms, according to Dave Elzas, CEO of global financial services provider Geneva Management Group (GMG).
For this reason, investors should be looking to invest in hard currency and hard assets offshore, in his view.
Diversification is the most prudent approach, says Elzas.
“You tend to concentrate your risk when investing in only one geographic location or one asset class,” he cautions.
Elzas highlights the attractiveness of investing in assets like international real estate for those who seek long term value growth. However, investors should be cautious about which types of real estate to target, as different segments of the global real estate market perform differently at different times.
“The UK remains a safe haven for property investors despite the political uncertainty caused by Brexit. Including international real estate in an investment portfolio is wise, if the properties have been appropriately selected,” advises Elzas.
In addition to real estate, carefully selected equity exposure on international stock exchanges can add significant value to one’s investment portfolio, he adds.
GMG looks particularly for long term value in shares of industry leading multinational corporations. The benefit of this is that these companies earn revenue from multiple countries, which adds to the diversification element and mitigates the volatility of the portfolio’s income profile.
“The pricing of intermediaries’ and management fees is also important since the investor’s returns should not be eroded by excessive or multiple layers of charges,” says Elzas.
This article was first published by Fin24 on 23 October 2017.