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Offshore Investments
Friday, December 1, 2006
Less conservative

Total assets of offshore collective investment funds rose to R91,4 billion (R84 billion) in the September quarter benefiting from the weaker rand and stepped up institutional flows.
Releasing the quarterly statistics today Association of Collective Investments chief executive Di Turpin says total net inflows into these foreign currency denominated funds were R935m – R421m (R23m) from institutions and R514m (R796m) from retail clients.
“The fund assets have benefited from the weaker rand and investors are clearly less conservative when it comes to investing offshore – flows into equity funds were R508m, nearly equal to the R531m which was invested in the lower risk asset allocation funds. Retail investors this quarter favoured direct equity investment while institutions preferred the asset allocation funds.
“Domestic markets continue to outperform those offshore but local investors should consider the attractions of diversifying their portfolios into other markets and currencies which will lower market risk and provide balanced portfolios. Under current Forex regulations - investors are allowed to invest up to R2m.
“Analysts generally recommend some 30% should be invested offshore. In the face of rising interest rates and lower demand for local equities from foreign buyers, JSE equity performance may be more muted in the months ahead. We could see stepped up investment in the 361 offshore funds available to local investors.”
Turpin says there is a wide variety of funds ranging from pure equity investments to bond and currency funds. Only funds approved by the Financial Services Board can be marketed in South Africa.

Copyright © Insurance Times and Investments® Vol:19.6 1st December, 2006
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