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It's My Money with Charize Beukes · Strictly Business

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  You're listening to Strictly Business Podcast with Lindsay Williams.
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  This edition of It's My Money is brought to you by Brenthurst Wealth, your partner
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  for global wealth creation.
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  Welcome to It's My Money.
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  It's My Money is brought to you by Brenthurst Wealth, South Africa's
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  multi-award winning boutique wealth manager.
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  With me this week from Brenthurst Wealth in Pretoria is Cherise Biokas.
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  Now, Cherise, you sent me an interesting article because this is a subject that...
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  we've done so many times, or I've done so many times with both you and your
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  colleagues, and it's all about investing
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  in South Africa.
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  And you've got a very interesting take on it.
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  You just say, why not just invest in South Africa?
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  And some of your headlines are really good because you say things like, your
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  portfolio should not mirror your passport, a big fish
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  in a small pond, etc.
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  But people of a certain generation as well, I'm talking about here, Cherise.
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  are familiar with South Africa.
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  It's what they know.
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  So they think, well, I'm going to stick to what I know.
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  Is that something you come up against often?
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  Hi, Lindsay.
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  Yes, it's good to be here.
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  So it is a question I get often, especially from, I wouldn't say it's
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  limited to the
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  younger generation, older generation as well.
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  But what they tend to ask me is why should they invest offshore when All of their
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  expenses, etc.
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  is in South Africa and they understand South Africa.
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  They live here, they know South Africa.
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  I mean, the JSE hasn't done very badly.
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  So why should they invest offshore?
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  And then we would very often have to make a case for investing offshore.
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  So yeah, it's definitely something we deal with quite often.
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  But also some people might turn around and say, yes, I understand it.
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  And also it's done well recently because I think I was speaking to an asset manager a
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  couple of days ago.
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  And he said to me that over one, three and five years, South African equities have
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  outperformed global equities.
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  So there is a case to be made statistically as well, Cherise.
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  That's correct.
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  So we have seen the JSE outperform over the past one, three and five years.
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  But that's not the total picture that we're looking at.
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  So if I were to take the JSE over the past decade.
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  It did close to 12% or delivered close to 12% per annum in RAND terms.
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  But if you were to take that RAND terms and divert it and take it to dollar,
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  performance in dollar
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  terms, that was about 2% in dollar terms.
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  So, yes, in RAND terms, it didn't, you know, disappoint at all.
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  But I think there's a bigger picture that we need to take into account here is that.
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  We're not saying you should take all your money out of South Africa.
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  I mean, local investments still have and always will have an important role because
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  we live here.
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  Most of our expenses are in rands.
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  But the question should simply be whether all of your investments should be
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  local and in rand and exposed to local factors.
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  That headline I mentioned in my introduction, a big fish in a small pond,
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  do you embellish that headline by saying?
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  that the All Share Index holds 119 shares.
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  So you're talking about size and also diversity and also choice because the
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  MSCI, for example, has nearly
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  2,500 stocks.
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  So it's a no-brainer, really.
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  Yes, yes, definitely.
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  So if you're thinking about diversifying, I mean, getting a diversified portfolio
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  within
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  only the JSE or local portfolio would be quite the task.
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  The JSE or South Africa makes up below 1% of all global listed equities.
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  So we're all fishing in the same shallow pond.
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  And effectively, we're not really getting much diversification.
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  So there's definitely, you know, room for improvement.
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  The 10 largest shares on the JSE makes up about 60% of the shares.
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  So if you only invest in the 10 largest shares, you've...
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  invested in 60% of the JSE.
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  And also the market is shrinking a bit because we don't get the listings that we
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  used to.
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  I don't know if you are old enough to remember the late 1990s when there was a
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  boom of
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  both small tech companies and small financial services companies coming to the
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  JSE.
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  It's not the case anymore.
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  Listings are few and far between and delistings are more regular than listings.
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  So there's fewer choice, but also there's a concentration risk.
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  Now, I know concentration risk exists overseas as well with the AI stocks in
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  particular dominating 2025.
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  But in the JSC, on the JSC rather, it's more pronounced.
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  I think around about a dozen or 10 of the really big stocks make up 50% of the major
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  index.
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  Yeah, that's true.
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  As I said, so in the 1990s, that was obviously before I practiced,
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  I was still in diapers.
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  But you were looking at about around about 750 listed companies in South
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  Africa, and that has declined to, or it's declined by almost 70% where it is today.
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  Obviously, as we mentioned, the small pond or the shallow pond is very much a
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  concentration risk for
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  local shares.
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  If you just look at the JSE, those top 10 shares, I mean, we can all name them by
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  name.
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  It's the NASPERS, Proces, the banks, your Anglo shares.
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  Those are your most or your biggest shares in the JSE.
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  So everyone has access to all of those same shares, be it in your RA.
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  or your pension fund, or any local investment that you do have, you will have
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  exposure to those because
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  it's the same bond.
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  What about the RAND?
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  People try to trade the RAND.
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  People say, well, the RAND is going to be stronger in the next couple of years and
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  it's been behaving rather nicely over the
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  period of 2025, 2026.
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  So I'm going to keep my assets local and take advantage of that.
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  me That is a warning sign.
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  Yes, that's one we get very often.
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  So now we've seen the client, the client has agreed to invest offshore or they see
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  the value in investing offshore.
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  And now they need to take their money offshore and invest physically in dollars.
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  But now they want to wait for the RAND.
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  And they kind of try and see what would be the best entry point from a Forex point of
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  view.
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  But that's something that's counterintuitive because at the end of the
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  day, You can never predict where the RAND is going to go.
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  It might go up.
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  It might come down.
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  No one knows.
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  So the best strategy you can have is to just get invested.
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  And we can even do a phase-in or phasing-in instruction for you, where we
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  phase in your money
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  over a period of time.
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  And by that way, you get exposure to a weighted average in RAND.
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  So, I mean, if you just look historically, A dollar cost us around
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  6.70 in 2010, 2011, whereas today it's 16.61.
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  I just checked it before you phoned me.
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  So that is roughly a 6% decline per year of the rand
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  against the dollar.
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  It's a powerful argument.
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  Yes, it's a really powerful argument.
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  I didn't realize it was that recent that it was below 7 to the US dollar.
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  That's quite extraordinary.
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  So, yeah, I mean, don't become a currency trader, I think, is the message that I'd
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  like to put across here.
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  You list a few questions here.
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  We've mentioned the RAND, questions that you're asked.
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  You've mentioned the RAND.
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  And here's a comment from somebody that might be like this.
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  It says the JSC looks cheaper than global markets.
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  Yes, sometimes it does look cheaper.
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  There are some really beaten up stocks on the JSC at the moment.
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  What would your response to that be, Cherise?
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  Yes.
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  So obviously the JSE, if a client sits across from me and they say to you that
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  the JSE is looking a bit
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  cheaper than global markets, I would say that valuation obviously makes or it
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  matters.
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  Cheap markets can stay cheap for years.
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  So you hold local value opportunities alongside global quality and growth
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  opportunities rather than forcing all of your money into one basket.
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  Almost like it's an all or nothing choice.
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  It doesn't have to be either South Africa or either offshore.
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  Why can't it be both?
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  Why can't we diversify and have both?
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  We've spoken about global concentration and JSC concentration.
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  The one that is interesting to me right at the end is someone says, but my expenses
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  are in rands.
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  How do you counter that one?
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  That's also, yeah, that's quite an interesting one.
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  So, yes, your expenses are in rands.
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  before you even...
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  open an investment portfolio, you are already exposed heavily to the local
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  market.
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  I mean, just look at where you own your house, look at where you earn your salary,
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  look at where you are investing your pension fund in.
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  So already before even opening an investment portfolio, you are exposed to
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  local assets.
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  And it's not a bad thing.
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  That's exactly why you have to keep those meaningful local assets.
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  But why would you want to tie your long-term growth to one economy and one
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  currency
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  and not diversified.
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  If you just look at travel expenses, any imports like technological imports, the
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  cell phones, the laptops
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  we use, all of them are priced in dollars.
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  And that's why you need to keep up with that inflation.
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  The final point that you make is about the offshore allowance.
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  Now, we've still got exchange controls, we know that, but they've been relaxed in a
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  remarkable way over the last
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  decade or so.
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  And we've had one this year as well, because in the 2026 budget, the single
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  discretionary allowance went from one million to
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  two million.
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  It's quite a surprise, actually, a pleasant surprise.
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  So there's no real excuse not to diversify overseas.
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  Yes, I think that was a very welcome change in the budget this year, because if
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  you look at one million rand five years ago or 10 years ago, it was worth much
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  more than it
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  is today.
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  So we really welcomed it with open arms.
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  All of our clients investing offshore have most of them have already used the
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  allowance that is now two
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  million rand per adult.
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  And I think...
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  That's what matters is the structure that you invest in.
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  So obviously you can have offshore exposure by feeder funds or RAND,
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  Denominated Global Fund,
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  but it's not the same as physically owning externalized dollars and
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  investing in physical dollars because your money will always have to come back to
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  RAND if you just own it in a feeder
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  fund, so to speak.
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  So I think that's it.
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  It was welcome.
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  Much overdue and it's already been, we've used it for a few clients this year
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  already.
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  It's beyond the scope of this podcast, Cherise, but I think what the message is
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  here, yes, consider diversifying
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  geographically, go overseas.
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  It's proved to be very profitable over the years, but also the way that you do it is
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  very important.
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  Getting the right structure.
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  It's no point going overseas and trading yourself and making money if you don't
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  have the right
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  information about it.
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  tax overseas and all sorts of other matters.
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  But as I say, we can't speak about that now.
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  What's your final message, please?
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  So I think you're absolutely right in saying that, Lindsay.
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  I mean, this is not something that a lot of people would want to do on their own
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  because there are tax
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  implications, there are exchange control implications, there are estate duty
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  implications.
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  So I think it would be best to maybe just see your financial planner.
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  ask the question and see if it's something that will fit in your portfolio.
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  Because nine times out of 10, I can guarantee you that there will be room in
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  your portfolio for offshore
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  exposure.
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  And it would be advisable to take it on.
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  So I think it's just very important to speak to your local advisor and see where
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  you can fit it in and in what
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  structures it can be invested in.
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  Very good advice.
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  Thank you very much for your time, Cherise.
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  Cherise Birkers is from Brentis Wealth in Pretoria.
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  And that was It's My Money.
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  It's My Money was brought to you by Brenthurst Wealth, an award-winning
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  boutique wealth management company.