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Offshore investing with niche managers: Willem de Vos – director, Autus Fund Managers

Good overseas companies are less expensive than good South Africa companies.

SIKI MGABADELI: We are focusing on offshore investing. The rand, of course, has been on a steady decline over the past five years and growth looks set to be in the more developed economies, not so much for emerging markets. So many are advocating offshore investment right now. They are saying take your money out of South Africa. So what to do?

Let’s ask Willem de Vos, who is director at Autus Fund Managers. Willem, thanks for your time this evening. What do you make of this? It feels like there is a growing movement for moving money out of the country.

WILLEM DE VOS: There is. And I think for some people, to be brutally honest, the reasons could be purely political. But we are arguing that’s the wrong reason to be doing this. You should be looking at investment credentials and from that perspective there are quite a few good reasons to do that. I know people have been doing it for years and should continue to do it, but also as I said to someone the other day, there are quite a lot of overseas people who are investing in South Africa.

So I think as South African we should not be so emotional and try and make investments on an emotional basis. We should look at the facts. Some of the facts currently are that the good South African companies are expensive and the good overseas are not that expensive. And on that basis that’s a good reason to take money offshore.

And then secondly because we are living in a jurisdiction where our currency gradually keeps on depreciating. If you intend to send some money overseas at some point, your actual inflation that you are trying to protect is not just South African inflation, it’s international inflation and on that basis you need to hedge yourself by investing in those jurisdictions as well.

SIKI MGABADELI: So it really is you’ve got to be quite calculating in the way that you make these decisions. Let’s talk a little bit about the options, because the world outside South Africa is a big one. Being able to make that decision about where you are going to take your money, how it affects your purchasing power, protecting yourself against inflation, but also choosing the right companies to invest in – it sounds like minefield.

WILLEM DE VOS: Ja, it does sound like it, but it actually can be quite straightforward when you are blessed in South Africa with quite a few locally domiciled players, the likes of Allan Gray with their Orbis Fund and Old Mutual and Sanlam and Coronation – and even some of the boutique asset managers, including ourselves, who have got rand-denominated offshore funds through which you can effectively own shares in Google, which is now called Alphabet and Apple and Starbucks and the like. Those are all great.

SIKI MGABADELI: That’s was Willem de Vos from Autus Fund Managers.

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