[PODCAST] ‘Even though you have rand volatility, it does allow investors and portfolio managers to price assets a bit more efficiently’: Sean Neethling – MorningstarInc SA on MoneywebNow with SimonPB. Download the podcast below. Moneyweb Currency
SIMON BROWN: I’m chatting with Sean Neethling, senior portfolio manager at Morningstar Investment Management SA. Sean, I appreciate the time today. Talking around the rand, and particularly when we’ve got offshore [investments], when should we perhaps take some profits on those? We’ve certainly seen a fair bit of depreciation in the currency recently.
Our fair value for the currency is about R14.30/dollar. So, at R18/dollar you can see that it’s fairly wide of that fair value.The way we’ve been thinking about that in the context of portfolios is we’ve taken some currency offshore at fairly attractive rates at about R15/dollar. And at R18/dollar we think it’s a good opportunity in certain mandates to start bringing some of those gains back, and to start taking profits from those offshore positions.
SEAN NEETHLING: Yes, I think that’s a really good question. I think it’s mandate specific. The way that we think about it [is] from a multi-asset perspective. If you think about the different ranges of portfolios, you think about a cautious investor. And the way we think about that is very different from the way we think about constructing funds for a more aggressive investor.
So, for cautious investors [we are] very conservative and manage that volatility quite actively, whereas on more aggressive portfolios we prefer to let those investment ideas play out and only at extreme levels will we really look at closing our currency positions. I think that’s probably one of the more important things to think about in the context of constructing Regulation 28 portfolios specifically. We know where investors have a wider opportunity set in terms of taking capital offshore.
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