| Time to increase your offshore exposure |
| |
In the current market at least 20% of your overall investment portfolio and 30 – 40% of the equity portion should be invested offshore, says Marius Fenwick of Mazars Moores Rowland Financial Services.
With the huge retraction in international markets there is still more embedded value in offshore equities than there is in the local market, Fenwick says.
“You’re buying companies with low PEs and high cash values. Microsoft, for example is sitting on substantial cash holdings” he says.
Exposing a portion of your portfolio to offshore equities also brings a degree of stability to your portfolio as you gain exposure to more developed economies and larger companies like Microsoft and Coca Cola, which aren’t available locally.
Offshore equities have already gained in excess of 20% this year and while they’ve fallen off somewhat lately, Fenwick says investors should get into the market so they can benefit from the next upward wave. That being said, offshore equities are not a short-term investment, as all indications are that the bear market will be around for longer than anticipated.
In terms of where to invest, Fenwick says Mazars doesn’t make calls on countries, preferring to invest in general worldwide equity funds from good asset management houses and allowing their fund managers to make the geographic splits.
In terms of types of economies, Fenwick says investors are increasingly focusing on emerging markets for superior returns. “Focusing primarily on developed markets will soon be a thing of the past as the contribution towards the world GDP gap between the two types of economies continues to narrow. This automatically changes the risk rating of emerging markets,” he says.
“Global GDP is now reaching the stage where emerging markets are going to produce more than developed countries,” Fenwick adds.
In addition to equities, Fenwick favours hedge funds, many of which have done well in the current financial crisis.
But he warns that investors should understand this asset class before they invest in it. Too many investors think hedge funds have no potential for downside, he says.
“It’s crucial to understand the risk and the strategy of the various hedge funds. They are not absolute return or guaranteed funds, but most people have the perception that they are.”
Finally, Fenwick says offshore property also presents an opportunity especially for cash buyers and particularly in the UK, where the market continues to be hit by wave after wave of bad news. But, he cautions, property is a long-term play. “Any upturn will take longer than we think. And when it comes to rentals, which affect property funds, we think a lot of rentals coming up for renewal over the short to medium term will actually be renegotiated at lower levels,” Fenwick concludes. |
|
|
|
|
No comments have been posted about this Article
|
|
|
|
|
|
|
|
|
E-mail this to a friend
Print this page
