Themes such as climate change, energy transition and innovative health care will be more prevalent this decade
Investors who took money offshore have enjoyed a great decade, with top-performing equity funds invested abroad returning average annual returns in excess of 15% a year in rand terms.
Now conditions are very different, valuations are much more stretched and the outlook is more challenging than it was when the last decade started, Koekemoer says. “Equities remain where you want to be invested, as this is the asset class with the best probability of giving you reasonable return above inflation over the next decade, but we just don’t think returns will be as good as they were this past decade.”
Global growth slowed in 2019 and this trend is likely to continue as trade wars and political turmoil persist, he says. If you buy in at current prices and the prices revert to their mean, it would lead to your investments losing value, Mangwiro says.Mangwiro says you should also consider the risks you face from having exposure to different geographies when you invest offshore.
But Koekemoer says now you need a more diversified portfolio, and if you are tracking an index, choose one that is more global and not focused on the US only. As an active investor, Coronation is factor-agnostic as it picks stocks based on their individual characteristics.
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