Now that investors hopefully have more clarity on how much of their wealth should be invested offshore (see our article entitled How much of my wealth should I invest offshore?) and we have assisted with the actual process of facilitating the forex transfer and opening accounts within the correct structures for you (see our article entitled How to do I invest offshore?), the question arises what to do with your offshore wealth?
At Anchor, we have an unconstrained global mandate and the choices available to us as global investors seeking diversification are vast. However, we also understand that it is exactly this extensive range of choices which is often overwhelming for an investor. That is why Anchor’s sophisticated and dedicated offshore investment team filters over 6,000 listed instruments daily and considers dozens of ideas that are provided by research houses and other investment sources on a weekly basis.
We are excited by, and passionate about, our access to the highest-quality companies listed anywhere in the world, where even the biggest investment managers (by assets under management [AuM]) aren’t constrained by the same liquidity issues facing investment managers in South Africa (SA). Because the search for quality and growth takes us to the farthest reaches of the local market, most SA investors would likely recognise more of the shares in the offshore Anchor High Street Equity Portfolio than they would those shares in our local equity mandate. The fact that we are exposed to a multitude of these companies in some way or another every day of our lives (think Facebook and Google) eases the fear some people might have of investing in the big bad world. One of our clients always enthuses, “live in the sun, invest in the shade.” We hope to shed some light on the shade for you and make it a far less scary prospect for investing.
Within the plethora of investment opportunities available, we narrow our choices down to those which have a strong focus on quality and sustainability of cash flows and dividends. We thoroughly investigate and debate every opportunity we consider attractive, eventually arriving at our investment choices, which we then constantly re-evaluate. We are acutely aware of risk and we constantly assess this aspect of investment. Once we have applied our investment philosophy and process, we allocate shares and other investment ideas to various discretionary portfolio mandates or funds, depending on their specific objectives.
Deciding on which of these offshore investment vehicles is suitable for you and your unique risk and return objectives and constraints is something our private client team is particularly passionate about. Thus, we will spend time forming a relationship with you and understanding your unique investment goals. We will also provide you with quality advice throughout your investment journey – investing is not only a proposal and the implementation thereof, but rather an ongoing journey for the investor.
Within the segregated share portfolio space, we run three different model portfolios which your individual portfolio will mirror to the extent that it is appropriate. However, we also have the flexibility to include other instruments or opportunities as these portfolios are tailored to an individual’s unique needs. Whilst our default equity holdings are tailored to the focus of our High Street Equity, Balanced and Global Dividend models, a client can request certain holdings or sectors. The first is suitable for the more aggressive investor, with a long-term time horizon and it focuses on high-quality, long-term shares dominated by stocks in developed markets (DMs). The Balanced Model Portfolio takes the High Street Equity Model Portfolio and then adjusts it for the more moderate risk investor, with a long-term time horizon. Added to the mix of high-quality equities, we include some bonds (both government and corporate), and property holdings. This portfolio is managed on an asset allocation basis, adding some defensiveness to the mix. For offshore investors with an income requirement from their portfolio, we also have a Segregated Portfolio, which focuses on high-quality equities that have high (and still growing) dividend yields. To optimise tax efficiency, and for estate planning purposes, we would possibly also look at wrapping these portfolios in an endowment.
Another option within the equity space is our Global Equity Fund. This fund aims to provide capital growth over the long term, which is achieved by investing in a concentrated portfolio of high-quality, growing companies with an attractive valuation. These companies are selected from both DMs and emerging markets (EMs). The added diversification of risk and return can be achieved by including positions in our Global Stable Fund and we can also take a more passive position through Stylo investments. The Global Stable Fund will give the investor a more balanced exposure across asset classes and it speaks to our ability to invest not only in equities but in fixed income securities, cash, real estate investment trusts (REITs) and some commodity indices. The objective of the fund is still to achieve maximum long-term returns, but with a greater focus on the preservation of the investor’s capital through risk diversification. The style of the fund is to identify macro-economic trends that will provide investment opportunities in certain asset classes, regions or sectors.
For investors that are not able to externalise funds (for example local trusts or companies) or for those individuals that have already externalised as much as they are able to but would like further offshore exposure, there are other options available. The Global Equity Fund touched on earlier has a Rand Feeder Fund version and then there is the Anchor BCI Worldwide Flexible Fund. The latter is a rand-denominated worldwide fund that has the flexibility to invest across assets classes both globally, and locally. At the heart of this fund’s philosophy is investments in companies with a durable competitive advantage that might be underappreciated by investors and, consequently, trade for less than they are worth. These companies have enduring qualities and a history of attractive returns on capital and, ideally, are led by highly talented management teams.
Last, but most certainly not least, a fund that bears testament to the entrepreneurial spirit of our business is our Anchor BCI Global Technology Fund. The past decade has borne witness to a dramatic shift in the way businesses interact with consumers, with technological (tech) innovation upending entire industries and value chains at a pace that was previously unthinkable. This phenomenon, which has now become commonly known as the 4th Industrial Revolution, has profound ramifications for most aspects of our lives – not least of which is how we invest. Naturally, an investor must embrace this new reality to both avoid exposure to redundancy and benefit from the outsized returns that will be earned by these trailblazers. It is in this context that we have established a fund which aims to maximise long-term returns by way of a global equity portfolio actively investing in companies that create and benefit from advances in technology.
The options, really, are endless and exciting. These investments are all fully flexible and can be adjusted as our investment views of the world and these companies or even your financial position changes. We are nimble and we will help you navigate the process. As an Anchor client you will have online access to your portfolio and, more importantly, you will have access to your portfolio manager to discuss your personal holdings at any time as we provide investors with direct access to Anchor’s investment professionals across the country. Our investment process and philosophy as asset managers is truly a global one, resulting in the availability of the model portfolios and funds briefly described above to suit any investor’s individual risk and return profiles.
