Diversify offshore against uncertainty and instability

News headlines these last few weeks have again confirmed that we live in times of much uncertainty. While there is much social upheaval and political and economic uncertainty in many parts of the world, investors in particular in South Africa and the region are bombarded almost every day with negative news that makes them nervous about the future.

But this is no time to panic. However, if you are a high net worth individual who has a substantial investment portfolio, savings or a pension, this is a time to reconsider and plan investment strategies. Even in times of great uncertainty, there are always options and opportunities available that, through intelligent planning, can smooth the way going forward, limit the uncertainties and secure long-term peace of mind.Diversify offshore against uncertainty instability

The best hedge against all the associated risks of the times we live in, is to diversify at least part of one’s portfolio offshore to more stable jurisdictions that offer a good return on investment, says Craig Featherby, CEO of leading Cape Town-based wealth and capital management firm, Carrick Wealth.

 

Planning proactively

Featherby believes that when confusion and uncertainty reign and clear answers to questions are in short supply, people generally react in one of three ways: either they choose to remain in blissful ignorance, or they panic and overreact, or they take proactive steps to safeguard their personal interests and carry on with their lives. The latter is of course the most sensible course for anyone concerned about growing and protecting their wealth, their investments and their future.

Local corporates find themselves in a similar position and are taking the same precautionary or remedial action – diversifying offshore to protect their shareholders, assets and balance sheet. In a note released in September, global credit ratings agency Moody’s, referring to domestic policy uncertainty, low GDP growth and poor business confidence, said that South African companies with substantial overseas operations were better placed to mitigate the effects thereof.

South Africa, and Zimbabwe more recently too, have had their unfair share of worrying news, uncertainty and instability. Many other countries also have their own concerns, for example Britain with Brexit, Spain with the crisis in Catalonia, the Middle East and its many wars, and Asia with the uncertain outlook caused by North Korea. So just looking at the world around us in the throes of a new global revolution, with social upheaval and economic or political instability in many countries, reaffirms the need for reasoned and calm assessment and decisions about one’s future, says Featherby.

In order to limit one’s exposure in high-risk jurisdictions, one should invest at least a portion of one’s portfolio in offshore opportunities across different geographic regions. Global opportunities have become more diverse, offer a wider range of choice, in many instances have become more attractive, and often also more accessible. But this has to be done with careful consideration of a wide variety of relevant factors, both domestic and foreign.

When considering diversifying offshore, a number of questions immediately arise: how much of one’s portfolio; where to; which investment vehicles to use; what are the potential pitfalls; and how to go about it.

This is where it becomes so important, says Featherby, to have a financial adviser or advisory firm that is reputable, independent, has the expertise and fully understands the rules and complexities of different offshore destinations. Carrick, for instance, only partners with recognised leaders in their field who are licensed in reputable, stable and well-regulated jurisdictions that function within a fully transparent and equitable legal environment.

 

Hedging against unpredictable impacts

To ensure that your best interests are well looked after, Featherby recommends that your financial adviser should meet with you regularly to review your portfolio and ensure the best possible future outcomes. Carrick, for instance, has a policy of quarterly reviews of their clients’ portfolios. But prudence also dictates that a review may be good at any time when circumstances change and more uncertainty prevails. Therefore, now would be as good a time as ever to do just that.

As the English poet John Milton said: Prudence is the virtue by which we discern what is proper to do under various circumstances in time and place. For more information or to have a financial adviser call you, send an email to Carrick Wealth at wealthmanagement@carrick-wealth.com.

Carrick Wealth is a registered South African financial services provider specialising in South African and international financial planning. Carrick is also licensed in Zimbabwe and Botswana, and holds three global licences in Mauritius. Carrick at all times maintains its independence with regard to product providers and asset managers, and provides bespoke risk assessment, financial planning and other services to high net worth individuals (HNWI). Through partnerships with industry leaders in the fields of foreign exchange, tax, international property, retirement planning, offshore bank accounts, trusts, wills and estate planning, Carrick is able to provide the highest levels of service for your financial planning and investment requirements, both offshore and domestic.