Which way forward

A currency play is not a clever idea, and offshore diversification timing could be tricky.

Anil Thakersee - MD of Old Mutual Unit Trusts - says that the local currency (the rand) has been flat, in terms of value, over the last 35 years.

Added to which the research shows that the rand tends towards its real value - and while this is good news for long term investors, it is bad news for those investors who thought they could make gains in currency plays.

Having said that, the short-term story is a totally different one, and the noise here has been quite deafening, and investors have got it spectacularly right or wrong. In most cases they have got it wrong, based on fund flows and statistics provided by Association of Collective Investments (ACI) and I-Net Bridge.

According to, ACI chief executive Di Turpin: "Analysts generally recommend some 30% should be invested offshore." Turpin says that due to 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."

Having shown that the currency play is risky, and unlikely to yield consistent returns, his fallback position, and the advice that most asset managers offer, is diversification, and more specifically offshore investments, with the caveat that timing could be tricky.

This issue is confirmed in the latest statistical update from the ACI, which shows that the total assets of offshore collective investments funds rose to R91.4bn (R84bn) in the September quarter, benefiting from the weaker rand and stepped up institutional flows.

Health warning: this article shouldn't be construed to be offering advice.

Editor's thoughts:
* For every rocket scientist out there, there are many investors who have burnt their fingers on that on-e-way bet, or sure thing. 
* Investors should get to grips with the concept and difference between short term and long term investment goals. The same concept applies to local and international markets.
* If there was an honest, and quick and easy way of making money and providing for one's retirement, it would have been discovered, patented and marketed internationally.