The topic of emigration probably had a seat at every middle-class and affluent dinner table in the past two weeks. As South Africans watched the news in horror, many would’ve considered emigration for the first time and others would’ve made the decision to pack their bags.
For those who have made that final decision, we are able to assist with the financial planning around this move. We can also assist with your understanding of offshore visas and the various strategies available to you to relocate your lives and families.
But regardless of whether you physically leave or stay in South Africa, your money can be given a passport. At Heritage Wealth Partners, we have followed this strategy with our clients for years.
Your money can be invested in a low risk “safe haven” like the ALTOS fund or in companies like Apple, Facebook and other global giants. You don’t need to sit with a portfolio of local banks and property funds, administered by institutions that take a huge chunk of fees along the way.
Our Unicorn Fund is placed with highly skilled investment managers who are experts in identifying attractive growth stocks that offer long-term potential. Like any wealth creation journey, there is volatility along the way but with risk comes reward. The Unicorn Fund has returned over 250% in only 30 months.
In some cases, these types of investments can be more volatile than others, especially when viewed in Rands. This is because the value is impacted by currency fluctuations as well as share price changes in the underlying offshore investments.
The key is to focus on the long-term trajectory.
To ensure you stay abreast of the key themes in global investing, our investment managers have set out some of their top-of-mind matters below.
Inflation
Is it transitory? Isn’t it? The debate isn’t around the level of inflation but rather how sustainable these levels are.
Inflation is measured as a year-on-year metric i.e. current prices vs. prices at the same time last year. As we continue to “lap” Covid lockdown periods as the base for the calculation, inflation looks high because the comparable period had much lower consumer spending than normal. There’s also the impact of supply chains under pressure this year, which has caused price hikes in certain goods.
There is growing concern in the market around the extent to which the Fed (the US central bank) appears to be relaxed about high asset prices and inflation running well above the targeted average.
Importantly, the Unicorn Fund is not specifically positioned for either high or low inflation. Such a strategy is followed by cyclical portfolios, whereas our investments are long-term in nature and do not depend on specific cycles.
China
Tech companies in China have had a rough few months, as the Chinese Communist Party (CCP) has clamped down on leading platforms.
The issues started when the first regulatory shots were fired towards Ant Group, Alibaba’s payments platform that was due to IPO towards the end of 2020 before the plug was pulled by the CCP literally at the eleventh hour.
Since then, the CCP has introduced risk into businesses ranging from Tencent to DiDi, the Chinese ride-hailing app that has been hammered by regulatory issues since listing in the US a few weeks ago. After listing at around $14, DiDi has dropped to $8. Most recently the CCP policy on education companies has further stressed the Chinese market.
Although the Unicorn Fund has limited exposure to China, the risk is around contagion into other tech stocks and the route that US regulators might still take with the largest tech companies. Although Facebook enjoyed a critical recent court victory, the overall issue hasn’t gone away.
Covid variants and impacts on the market
Much of the recent volatility in the market has been based on the spread of the Delta variant in the world’s most important economies.
In the UK for example, strict isolation requirements are resulting in major disruptions to supply chains as a large portion of the labour force is not allowed to work. This is the case even for those who have been vaccinated.
The Unicorn Fund is invested in numerous platform businesses which are driving the future of how we work and live. As the world continues to adapt to Covid and the risk of ongoing variants, these companies are perfectly positioned to grow in relevance among consumers and businesses.
Conclusion
There’s no getting away from it – the markets are volatile. We are confident that our strategy for long-term wealth creation is the right one.
For those looking for more stable returns, we also have the Altos Fund which we have written about previously. This fund targets a USD-based return that is well above South African money market rates, without taking risk on underlying market cycles and volatility.
Whatever your risk appetite is, we have a way to give your money a passport.