Why diversifying offshore shouldn’t even be a consideration
Ratings agency Moody’s has lowered South Africa’s GDP growth prospects for 2019 – cutting it to 1.0% from a previous forecast of 1.3%. This follows Stats SA’s announcement of dismal GDP numbers which revealed a quarterly decline of 3.2%.
“The quarterly decline, the largest in 10 years, can be attributed to a variety of socio-economic issues. While volatility in South Africa is nothing new, the poor growth prospects present the perfect example as to why South African investors need to diversify their investments. By going global, South African investors get exposure to asset classes in international markets which will provide the necessary diversification to soften the blow,” says Doug Abbott, South African Country Head of global asset manager Schroders.
“Local investors need to consider all opportunities available to them – and this includes offshore options. In an audience poll conducted at the fourth annual Schroders Investment Symposium for South African investors in March, of the 150 institutional and retail clients who took part 49% said they expected to increase their offshore allocation, with 42% expected to maintain their allocations to offshore investments. To make the best possible decisions and with the current local economic and political climate, increasing offshore allocation may be the best bet” adds Abbott.