Why invest offshore now?

Returns of developed market equities have continued to lag behind the returns of emerging market equities. Emerging markets, including South Africa, have enjoyed strong inflows of capital from abroad, supporting valuations on our stock markets and helping the rand to strengthen by nearly 25 percent versus the US dollar in 2009 and 2010. This strong rand has been one reason why inflation has remained subdued over the last year, as approximately one-third of the items in our inflation basket are imported.
For long-term saving to be successful, the value of your investments must keep pace with inflation, and preferably beat it over the long term. A strong rand tends to drive inflation down; a weakening rand typically leads to higher inflation. To be protected against higher inflation from a weak rand, it may help to be invested offshore as the value of your assets in rand terms should grow as the currency weakens.
We think there is a real risk that the rand may weaken from current levels, and therefore believe that foreign exposure is an appropriate addition to clients' portfolios.
What are the options?There are many options for investors offshore. Shares are an obvious place to start for people with a long time horizon. It is also important to consider other options when looking abroad. An interesting dynamic is the growing link, or correlation, between share prices globally and the value of emerging market currencies. This link can work against you if you are investing in offshore equities in order to enjoy the benefits of rand weakness

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