30 September 2021
OFFSHORE SUPPLEMENT
Why global multi-asset class funds are a must-have moving into a post-COVID world
SOPHISTICATED THINKING GOING INTO HOW WE INVEST BEYOND EQUITIES
BY CHRISTO LINEVELDT Investment Specialist, Coronation
I
nvestors seeking offshore exposure may be wondering how best to go about it when traditional global asset classes look fully priced and many risks dominate the news flow. We believe that maintaining a well-diversified portfolio that comprises more than just one asset class remains the most appropriate way to navigate a challenging investment environment. Here’s what investors need to consider: Pressures are building Most developed market economies are in the midst of a robust economic recovery that has provided tailwinds for equity markets and raised the prospect of higher global inflation. The two factors driving these recoveries are the amount of stimulus injected into these economies and the
progress these countries have made in vaccinating their populations. Savings rates are up, balance sheets are in good shape, interest rates remain low and economic lockdowns over the past year have meant significant pent-up demand is waiting to be fulfilled as conditions improve. Against this backdrop, it’s not surprising that inflationary pressures are building up. Diversification and active management as a better forward-looking strategy With inflation among many risks facing global investors, we believe alphageneration through selectively identifying attractively priced shares, in addition to diversification into other asset classes, will be a better forward-looking strategy than just owning the index. Our multi-asset class portfolios typically have exposure to 40 - 60 shares, carefully selected out of a universe of 2 500 - 3 500, which means they don’t look anything like the index or our peers. This level of diversification is hard to replicate on an individual basis. Our multi-asset class funds are further differentiated in that we hold many investment opportunities outside the traditional 60% equity/40% bonds multiasset portfolio in order to sweat every basis point of potential returns. Thus, while we continue to believe that it’s essential to have exposure to equities, we believe it is also important to include other assets – such as infrastructure, high yield income, global property and absolute return investments – in our multi-asset class
SOPHISTICATED THINKING GOING INTO HOW WE INVEST BEYOND EQUITIES Investment-grade fixed income Absolute returns
EQUITIES REMAIN THE FOUNDATION WITH WHICH TO ACHIEVE EQUITIES REAL RETURNS REMAIN THE FOUNDATION WITH WHICH TO ACHIEVE REAL RETURNS
Investment-grade fixed income Inflation protection Absolute returns Equity High-yield fixed income Inflation protection
Equity
R
24 www.moneymarketing.co.za
NON-EQUITY EXPOSURE
High-yield fixed income Real assets
Source: Coronation
Source: Coronation
funds. This is especially important in an environment where, in our view, the global bond index as a whole offers a negative real return over the next several years. Each of our global multi-asset class funds benefits from exposure to these non-traditional assets, with the extent of their exposure in the portfolios dependent on the risk budget of the fund. This ranges from around 30% in the Global Capital Plus Fund, with a cautious risk profile, to 25% in the Coronation Global Managed Fund, a moderate risk balanced fund, and around 15% in the more aggressive Global Optimum Growth. The same funds have effective equity exposure of 28%, 59% and 80% respectively, with the balance held in cash and selected fixed income instruments.
Montenegro Citizenship-by-Investment programme to close at end of year esidence and citizenship planning firm Henley & Partners has announced its milestone submission of 100 applications for the Montenegro Citizenshipby-Investment Programme. Of these, 33 international investors and their families have already received both their citizenship and their passports, despite the ongoing disruptions caused by the coronavirus pandemic. This highly sought-after citizenship-by-investment programme is due to close at the end of this year. Rade Ljumović, Director at Henley & Partners in Montenegro, says the programme offers high-networth investors a significant opportunity in a dynamic regional market but there are only a few months left to apply. “One reason for Montenegro’s success is that it caters for investors with a diverse range of interests and requirements. Investors can choose between glamorous seaside resorts where they can invest in new hotels that are being established by reputable developers, including cutting-edge options such as the SIRO brand by Kerzner International and InterContinental. Alternatively, they can opt for the northern parts of the country, where there are exclusive ski and mountain resorts in advanced stages of construction, such as Swissôtel.” Montenegro is currently on the EU’s ‘safe list’ of
Real assets
NON-EQUITY EXPOSURE
countries with relatively low rates of COVID-19 infection, and its passport ranks 45th on the Henley Passport Index, providing its holders with visa-free or visa-onarrival access to 124 destinations worldwide, including Hong Kong, Russia, Singapore, Turkey, the UAE, and the countries in Europe’s Schengen Area. As well as being a NATO member, Montenegro is a recognised candidate for future membership of the EU, with the government’s chief negotiator, Zorka Kordic, recently giving 2024 as the target timeline for Montenegrin accession. Last month, the EU Information Centre in Montenegro published research findings showing that 73.8% of the population supported EU accession, and 86.9% would vote in favour of joining the EU should there be a referendum on the question. The EU ambassador to Montenegro, Oana Cristina Popa, recently noted that the trust of Montenegrin citizens is motivating to the EU and encouraging for Montenegro’s accession. Applicants to the Montenegro Citizenship-by-Investment Programme are required to make a defined economic contribution to the country. In exchange, and subject to a stringent vetting and due diligence process, including thorough background checks by specialised firms, applicants and their families are granted Montenegrin citizenship. The main applicant must be over 18 years of
Building well-diversified portfolios Building portfolios that span six asset classes and look nothing like the index takes extensive research and a significant amount of investment experience and expertise. It is the combination of this expertise and our robust and tried-and-tested investment approach that enables our multi-asset class funds to provide investors with exposure to a wealth of opportunities in traditional and non-traditional asset classes, actively balancing risk and returns to deliver on our investors’ various objectives across the fund range. Coronation is an authorised financial services provider.
age, meet the application requirements, and contribute EUR100 000 to the Government of Montenegro, designated for the advancement of local under-developed, selfgovernment units. In addition, applicants can invest at least EUR450 000 in an approved development project in the capital Podgorica, or in the popular coastal region of Montenegro. Alternatively, they can invest a minimum of EUR250 000 in an approved development project in the northern or central regions of Montenegro (excluding Podgorica). Additional government processing fees and other application fees apply. CEO of Henley & Partners, Dr Juerg Steffen, says the resulting increase in business activity and new employment opportunities created by the programme will benefit all Montenegrins. “Investment migration enables sovereign states such as Montenegro to tap into a new source of sustainable revenue without becoming overleveraged. In the current pandemic environment, as in the wake of previous disruptions such as the 2008 financial crisis, residence and citizenship programmes create significant value both for investors and for sovereign states in need of alternative revenue streams.” Rade Ljumović, Director: Henley & Partners, Montenegro
