Why SA investors have been slow to send their money offshore
THE typical South African investor is not keen on global exposure, says Tony Granger, an independent financial adviser and consultant to fund managers and life offices in the UK.
After meeting recently with local fund managers, financial advisers and the Financial Services Board, Granger concludes that many brokers punting international equity unit trusts have misread local investors.
"My understanding of a typical SA investor wishing to invest offshore is of one who treats the offshore instrument as a nest egg against political uncertainty and the fear of a falling rand.
"The typical investor mindset is one of caution, with the type of investment preferred being those products where their capital is not at great risk."
Since the July 1 relaxation in foreign exchange controls, South Africans have been bombarded by a deluge of international offshore groups offering a wide range of mostly global or international equity investments.
Millions have been spent on marketing and advertising campaigns in the expectation that billions of rands would pour out of SA into international markets.
"The outflow figure estimated by government was R3-billion.
"But in reality it can be measured in hundreds of millions of rands," says Granger.
He cites the following reasons for the apparent lack of enthusiasm towards offshore investments shown by South Africans:
Offering advice to private portfolio managers, Granger says he expects some form of market correction and has therefore been "parking" his clients' money in capital-protected products for the past few months.
"Investment growth is steady, if unspectacular, but at least I sleep well knowing my clients have some measure of capital protection."
Granger is confident that once the thinking changes and local portfolio managers start adjusting investment advice to the client's requirements - taking into account risk and the client's perspective (why do they wish to invest offshore) - more people will consider offshore investment possibilities.
The opening up of the offshore investment market is a good opportunity for overseas portfolio managers to gain new business from SA investors. And the ability to invest offshore can also be beneficial to investors wishing to diversify their portfolios, he says. Top of page