Investing in Australia Directly with Resolute Wealth

by | Oct 1, 2018

For many years now, we have been strong advocates of direct offshore investing and it has been a core focus for us to ensure that our clients have access to the best offshore investments available in the market.

In light of our offshore offering to our investors, we are very excited to announce that we have been appointed as registered financial advisors on the Allan Gray Australia platform, which allows us to now offer our clients direct access to the Australian investment market. Whether you are living in Australia already or living in South Africa and possibly looking to move over there in time, we are now able to advise in both countries for your investment options in the Aussie market.

As we continue to service our private clients from all regions across the globe, we see this as the start of our relationship with our advisory arm in Australia going forward. Further to this we are always looking to build up relationships with investment and financial planning houses in Australia, the USA and the UK which enables our clients to plan appropriately when moving investments over to these markets. Where appropriate we have also built up strategic relationships with external partners to provide specialist advice on tax and emigration implications when our clients look abroad.

The sharp depreciation in the rand over the last few weeks has been extreme, but it’s certainly not the first time that the rand has experienced such volatile sell-offs. The Rand touched over 15.70 R/$ this year and also touched over 17 R/$ in the past, and I can say convincingly that this will continue to happen into the future. We can simply cast our minds back on the history of our Rand along with our other emerging market peers who have the same issues (Venezuela, Turkey, Brazil, Russia, India, etc.…). This again reminded investors of the harsh realities that emerging market investors always need to have some offshore exposure (it doesn’t matter how much we love our country).

Over the coming months and possibly years there will be a great withdrawal of liquidity and rising interest rates in developed markets which is going to be a key driver of financial markets that are already at all-time highs. Higher tariffs and possible trade wars have also rattled investors which causes inflationary pressures and could force a quicker tightening to various stimulus packages across the world. While markets are caught in the crossfire, it has also been clear that it’s never the time to take a side but to simply be diversified. Our investment team continues to believe that offshore markets offer better opportunities than SA, but that selectivity is key when it comes to choosing investment funds when braving the global market – with that being said, we prefer and blend of active and passive funds which enhances returns and lowers cost.

Some quick points on why we highly recommend offshore investing through Australia or our global based portfolios:

  • You get access to companies, investment funds and geographies that are not available to investors in South Africa.
  • SA GDP makes up less than 0.50% of global GDP and it is simply not good enough to have all your hard-earned money invested in such a small economy.
  • We only have a few hundred shares available to invest in the SA market vs the 1000’s of global companies one can invest in when using a global platform.
  • Global funds tend to lead the charge with lower fees and have broader flexibility to invest across the world.
  • Offshoreinvestments may perform better at times than local investments, and vice versa, depending on various factors, such as global economic conditions and exchange rates

A little more on Allan Gray Australia:

When you invest with Allan Gray, you’re not just buying into a managed fund, you’re buying into a distinctive investment philosophy. That philosophy is simple… to take a contrarian approach, apply it consistently and invest for the long-term. As contrarian investors, Allan Gray never try to guess external sentiments, the next share price movement, or trends. Instead, they scrutinize opportunities that aren’t necessarily ‘obvious’. Rather than following popular opinion, they search for great buying opportunities in places others overlook or undervalue. They closely analyze investments such as shares to understand what will drive their value over the next five, ten or even 20 years.

While the investment universe offers many different options to investors, there are certain benchmarks which these are generally judged against. Money market rates offer you the least risk, but this usually comes with the lowest return. A fixed or term-deposit will usually offer you slightly better interest rates, dependent on the length of time you commit your funds to the lock-in period. With regards to equity investments, a typical benchmark would be the countries stock exchange or “All Share Index”. In Australia, this index is the S&P/ASX200.

Allan Grays actively managed returns speak for themselves and as advisors we have committed our business to finding the best investments for our clients. Over the years we have proven through the selection of our chosen funds that active management can outperform the market and its passive peer group when invested over the long term, which is why we can conclude that the three Allan Gray Australia funds that we will be using for our clients have all delivered impressive returns over their respective lifespans and is suitable for our clients investments in Australia to achieve above inflation returns. The funds available are:

Allan Gray Australia Equity Fund
The Equity Fund is an actively managed, contrarian fund that gives you the opportunity to outperform the market over the long term by investing in select Australian shares. Like many funds the Equity Fund aims to be fully exposed to the Australian share market, but the investment strategy is very different to most. That’s what gives them an edge and the potential to outperform over the long term.

Allan Gray Australia Balanced Fund
The Balanced Fund is a great option for investors who are looking for capital growth through a diversified portfolio, but want the convenience of leaving the asset allocation to a professional. The aim of the Fund is to provide long-term growth through shares, fixed income and commodity investments from Australia and overseas.

Allan Gray Australia Stable Fund
The Stable Fund is a more conservative investment that aims to outperform cash and boost your returns by blending cash with selected shares. Outperforming cash without significantly increasing risk is the goal of many investors. The Stable Fund aims to answer this need.

 

Latest Returns (AUD$)

1 year 3 years 5 years

10 years

Aus. Money Market 1.5% 1.58% 1.85% 2.78%
12 Month Fixed Deposit 2.80%
Allan Gray AUS Stable 5.00% 8.70% 6.50%
Allan Gray AUS Balanced 10.40%
Allan Gray AUS Equity 13.80% 21.10% 11.80% 10.10%
S&P/ASX 200 PR AUD 9.90% 7.09% 3.18% 6.4%

Resolute Direct Offshore Portfolios:

For clients looking for a general offshore investment, our Resolute offshore portfolios offer an excellent blend of global investment funds which is managed our investment team through our multi-manager approach. They are available to clients from Australia, UK, Europe and the USA and can be denominated in $, £ or € through our preferred platforms: Allan Gray, Investec and Glacier. The minimum investment starts from $1,500.

At Resolute Wealth we firmly believe that a portion of your investment portfolio should be held offshore. This provides protection against a depreciating Rand and enhances the diversification of your investment portfolio. Every investor should be utilizing a portion of their individual R1,000,000 discretionary travel allowance or additional R10,000,000 offshore investment allowance as permitted by the SA Reserve Bank. Resolute Wealth specializes in the setup of tailor-made offshore solutions for our clients using tax efficient investment vehicles and global investment portfolios. In addition to this we facilitate the foreign exchange transfer with SARS and manage the process with our clients from start to finish.

OUR OFFSHORE INVESTMENT RANGE CONSISTS OF:

  • Offshore Unit Trusts
  • Offshore Endowments
  • Offshore Share Portfolios (Subject to Manager interviews first)

If you would like more information on the product offering, please do not hesitate to contact us and we will gladly assist you in this matter.