The Johannesburg Stock Exchange (JSE) is the largest stock exchange in Africa (and 17^th largest in the world), yet the entire African continent only accounts for 1.5% of global stock market value. Other asset classes like SA bonds and property also only make up a fraction of the global value. Taking advantage of investment opportunities offshore means that you as an investor not only diversify your country risk, you also get exposure to some of the fastest growing and exciting industries globally, many of which you are probably making use of every day.

Source: Visual Capitalist

You could have found this article through a search on Google that led you to Sharenet Views. Your computer, possibly manufactured by Dell, uses Windows software that Microsoft produces. Or perhaps you are reading it on your Apple iPhone. These companies are all publicly traded companies that you can invest in. Is technology not your thing? Well then perhaps transport is. If you drive an Audi or Polo you can invest in Volkswagen. Maybe you’re thinking electric cars are the future, so why not invest in Tesla? If an automobile is thinking too small for you, then go with airplanes instead and invest in Boeing. These industries are not available on the local market, but fortunately, the offshore market is now available on your doorstep and there are a few simple ways to gain access to it.

#1 Open a trading account that allows access to foreign stock markets

This is an option only confident investors should consider. Many who try picking companies on the JSE will find that it’s not that easy sifting through nearly 500 companies and picking a winner. Now imagine having to go through that exercise with over 5 500 companies listed in the US alone. If you think you have what it takes, there are brokers in SA that offer access to foreign stock exchanges.

#2 Invest directly in a foreign unit trust

You may not have the skills or time to make the best stock picks in the global market, so why not leave that to the professionals. There are thousands of funds to choose from, but knowing which one is best suitable for you is a daunting task. In addition, you will need to get SARB approval to take your money offshore, adding more time to an already administrative intense process.

#3 Invest in a locally domiciled global unit trust

This is by far the easiest method for the South African investor to gain exposure to international markets. There are unit trusts domiciled in South Africa, meaning you make your investment in ZAR. The fund managers of these funds then convert that ZAR to foreign currencies, like USD, to buy assets in offshore markets. Your investment exposure is in a foreign asset and currency, but your statement always reflects the ZAR value of your exposure. If you feel that you don’t have the required expertise or time to decide which fund to invest in, you could consider a global fund-of-funds where the portfolio manager picks the combination of global funds he/she thinks will deliver the best performance. The Sharenet BCI Global Balanced FoF is a good example of this type of investment.

#4 Buy a global exchange traded fund (ETF)

It is easy for local investors to buy an ETF either through a trading account (like Sharenet Securities), LISP or directly from the provider. A global ETF is a passive investment and tracks a global market index. ETF’s are listed locally, meaning you make your investment in ZAR and get your money back in ZAR when you sell, but you get the exposure to the foreign asset and the return from it. There are assorted options available to local investors that could give you exposure to specific regions.

Conclusion

Investment into international markets has never been easier for South African investors and global brands like Apple and Facebook are virtually at your fingertips. It provides a valuable addition to your portfolio, with fast-growing sectors abroad that could offset weakness from a stagnant South African economy. It also provides good diversification away from political risk specific to SA and it’s easily accessible through several channels that require little admin and time.