Returns by db x-trackers show value of offshore exposure

Wehmeyer Ferreira, head of db x-trackers in South Africa.

The value of offshore investment diversification – especially during a period of Rand weakness – has been underlined by returns achieved by db x-trackers, the range of exchange traded funds (ETFs) linked to some of the world’s biggest developed markets.

The db x-tracker fund linked to the Japanese equity market achieved a total return of 27.11% for the year to July 31, 2015 while the ETF that mirrors the performance of MSCI USA Index gained 29.3529.35%.

The ETF fund that captures the performance of the MSCI World Index showed a return over this period of 22.74%.

Wehmeyer Ferreira, head of db x-trackers in South Africa, noted: “The ETFs in our range are a convenient and cost-effective way of gaining exposure to major developed markets.

“At times of Rand weakness any equity market gains are compounded by currency factors when the Rand return is calculated.

“Though this can boost returns, offshore diversification is desirable in any event as a means of managing the risks associated with a South African market that is relatively small and subject to intermittent bouts of volatility.”

The Rand-denominated db x-trackers range is listed and traded on the JSE.

ETFs are a form of passive investment designed to mirror the performance of a specific index. Unlike active investment funds, they do not attempt to outperform the market, and can therefore charge more cost-effective fees.

Returns for all five funds in the db x-trackers range for as at 31st July 2015are shown in the accompanying tabulation.