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Quick Tip: In Praise of Offshore Diversification

By beled | July 5, 2013

As the rand continues to devalue, more and more South African investors are considering offshore diversification.  Many also ask the question, ‘Is it too late?’  For David Leslie, MD of Belmont Asset Management, the answer is an emphatic ‘No’, but perhaps not just for the reasons you may expect.

According to Leslie, diversification is an essential part of any robust portfolio structuring exercise.  It is not just a South African consideration fuelled by a devaluing local currency.  It is true that in South Africa we have some socio-economic and political circumstances which suggest that diversifying into stronger currencies is prudent, but diversification is a much bigger issue than that.

Leslie comments, ‘As you diversify into other countries and gain access to other markets, your universe of available investments expands.  You are presented with a broad spectrum of investment options and opportunities to structure a balanced portfolio which matches your individual risk profile.

‘It is no secret that emerging markets have outperformed the developed markets for the last decade: a quick look at the 10 year graphs of the FTSE100 vs the ALSI40 illustrates this point perfectly.  But the ship is turning and there is once again value to be found in offshore, developed markets.

‘A contrarian view, perhaps, but quality stock selection – based on value – is the hallmark of success in any properly structured portfolio.  And, as always, patience and a long term investment view should never be underestimated.’

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