SPONSORED - Most South African investors know that they need to include global exposure in their portfolios, and that they should increase their exposure if they already have it.
There are, however, many considerations, such as different asset classes and available investment options.
As interest rates start to rise, perhaps investors should hold onto some dollars? Or perhaps they should consider buying double-A or even triple-A-rated bonds.
Their yields are extremely low, but maybe they are safer? On the other hand, the stock market has seen some extreme volatility, but does that mean it is now too dangerous to invest in?
Partly due to the volatility of our local currency, South African investors can actually increase their risk if they only hold onto hard currencies, like dollars and euros, or low-yielding global bonds.
As global investment specialists, we believe in allocating an appropriate portion of a client’s overall portfolio to global equities. One apparent reason for this is that investors can access geographies and sectors that are sparsely represented in our local market.
Also, if the core aim of investing is to preserve and grow wealth over the long term, it makes sense to invest in a portfolio of leading companies, most of which are listed outside our borders.
It is also important for investors to consider long-term inflation, which can be beaten by investing in companies that successfully preserve their ability to make money and pass on cost increases to the end consumer.
These are companies like Apple, Coca-Cola and Nike, that have pricing power through their leading brands.
Other options are big tech companies that ingrain themselves into the daily lives of consumers to such an extent that they even achieve verb status. If you do not believe us, just google it.
However, a company’s ability to make money is not the only thing that matters to investors.
Beating inflation requires sustainable long-term growth. For this reason, at Efficient Global Investing* we also want exposure to businesses that benefit from structural themes in the global economy.
In this regard, we consider companies that provide infrastructure as we urbanise, healthcare as we grow older, and finer things for us to enjoy as global wealth rises.
While it is impossible to time the markets, the current market volatility provides a unique opportunity for long-term investors.
The market uncertainty allows businesses to create more value for their shareholders by acquiring rivals at much more attractive prices.
It also allows them to restructure underperforming assets and buy back their own shares at more attractive valuations. Long-term investors can then acquire these businesses while they trade at these more attractive valuations and gear themselves for exceptional growth.
As the leaders in global investing, we can help investors take advantage of volatility and buy leading businesses at inviting prices. Do not miss out; contact us today!