25 March 2019

South Africa: Take More Savings Offshore, Money Managers Urge SA Investors

analysis

Increasingly, financial advisers are recommending that SA investors take as much of their discretionary investments out of the country as they can. But is taking 100% of your investment income out of the country sensible, never mind unpatriotic?

South African investors are in a precarious position. The JSE is underperforming its emerging market counterparts, real house prices are falling and rolling blackouts are making the threat of a rating downgrade more imminent. Political and economic uncertainty is adding to that discomfort. The future looks bleak for those trying to grow or even just preserve their wealth in local markets.

South Africa is now in its longest downward business cycle since the end of World War 2 and the performance of its assets continue to reflect this unfortunate reality. The rand has lost a third of its value against the US dollar in the past five years and remains under pressure. Investors in South African equities have lagged developed markets while house prices have increased at less than half the rate of inflation for several years.

The S&P 500, for example, has delivered a total return of nearly 100% in the past five years, the NASDAQ 147% and even the 10-year...

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