One of the most common questions from clients is: “When is the best time to invest offshore?” Naturally, the next discussion point is the strength of the rand. Clients should, however, recognise that attempting to time currency movements perfectly is challenging and may not always align with broader investment goals.
Do your clients’ needs include offshore exposure?
There will be periods when the currency is undervalued, and likewise, periods when it is overvalued. Waiting for the best time to invest offshore is sometimes just a different way of saying that you are trying to time the currency.
To manage currency risks effectively, investment platforms and authorised forex dealers offer various tools. For instance, with the Momentum Wealth International platform, clients can phase in their investments over time, thereby reducing exposure to market volatility. Forex providers also offer tools such as forward contracts, which lock in exchange rates for future transactions.
The exchange rate is just one of the considerations to look at when investing offshore, but it should never be the sole reason to invest offshore. Things like where the investment will be held, what type of product or structure will be used, and how this will influence the client’s tax situation both during their lifetime and at death are far better elements to spend time getting right. Those are typically the elements that advisers and their clients should focus on – those that are within their control, rather than the currency or the market.
The exchange rate is just one of the considerations to look at when investing offshore, but it should never be the sole reason to invest offshore.
Clients would be far better off articulating their needs and objectives to a qualified financial adviser and implementing the most suitable asset allocation to meet those needs. Where that need includes offshore exposure, the focus should be on the most feasible way to implement the plan given the client’s circumstances.
Reasons to invest offshore
In general, people should consider investing offshore as a means of diversification, as international markets offer a significantly larger opportunity set and exposure to asset classes, industries, companies, and geographies that are less accessible in the local equity market.
This can lead to a more diversified investment portfolio, resulting in a smoother overall return profile.
Investing offshore is also a good idea to maintain offshore currency spending power. If a client plans to live abroad for a while or permanently, or if their children are planning to study there, it may be sensible to have money available there already.
How to invest offshore
People can invest offshore by using either of our investment platforms: the Momentum Wealth local platform, or directly offshore through Momentum Wealth International, based in Guernsey, by using their foreign currency allowance.
Through the Momentum Wealth local platform, clients can invest rands into:
- rand-denominated international funds; and
- funds denominated in a foreign currency (when making use of an endowment or a retirement product)
Momentum Wealth International offers a sophisticated investment framework for advisers to build customised portfolios that align with their clients’ unique investment goals, time horizons, and risk profiles. The platform provides access to a combination of global actively managed investment funds (unit trusts), cost-efficient ETFs, discretionary model portfolios, and fully tailored international personal share portfolios.
These components empower advisers to create globally diversified investment strategies across asset classes, geographies, currencies, and mandates, all managed on a single, streamlined investment platform.
Momentum Wealth International offers a sophisticated investment framework for advisers to build customised portfolios that align with their clients’ unique investment goals, time horizons, and risk profiles.
Yet, while we bring you a plethora of choices, we also simplify the selection of underlying investment components. Momentum Wealth International offers guided solutions from world-class investment managers and its investment partners, Curate Investments, Equilibrium, and Momentum Securities. These teams conduct rigorous due diligence and ongoing monitoring to ensure quality and performance across market cycles.
Our comprehensive range of products, investment funds and other investment components places us at the forefront of global investment solutions catering to every client’s offshore investing needs.
Achieve your investment goals
At Momentum Wealth, your clients’ offshore investment isn’t just another investment. It’s personal to them. We can help you and your client with the offshore investment solutions they need to achieve their goals.
And ultimately, the decision to invest offshore should be based on a comprehensive assessment of individual financial objectives and risk tolerance.
For more information on offshore investing solutions, speak to your Momentum consultant or visit Momentum Wealth International at momentum.co.gg.
This article is for general information only and does not constitute financial, legal, tax, accounting or investment advice under the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS). It is not a solicitation to invest. Past performance is not necessarily indicative of future returns. While care is taken to ensure accuracy, no guarantees are made regarding completeness or reliability. No liability is accepted for any loss from reliance on this content. Terms apply. Consult your financial adviser, Momentum Metropolitan Life Limited, Guernsey Branch or Momentum Wealth International Limited. Momentum Metropolitan Life Limited, Guernsey Branch is licensed by the Guernsey Financial Services Commission under the Insurance Business (Bailiwick of Guernsey) Law 2002 to carry on long-term insurance business. Momentum Wealth International Limited is registered in Guernsey (Reg. No. 30830) and licensed by the Guernsey Financial Services Commission to conduct Investment Business and is an authorised financial services provider (FSP 13495) under FAIS in South Africa and part of Momentum Metropolitan Life Limited (FSP 6406, Reg no 1904/002186/06), an authorised financial services provider and registered credit provider. Momentum Wealth International Limited and Momentum Metropolitan Life Limited Guernsey Branch are part of Momentum Group Limited (Reg no 2000/031756/06). Curate Investments (Pty) Ltd is an authorised financial services provider (FSP 53549, Reg no 2023/747232/07). Momentum Securities (Pty) Limited is an authorised financial and credit provider (FSP 29547, Reg no 1974/000041/07, NCRCP 2518) and a member of the JSE Ltd. Equilibrium Investment Management (Pty) Ltd is an authorised financial services provider (FSP 32726, Reg no 2007/018275/07).
