Investing

On a recent trip to the Goegab Nature Reserve outside Springbok, we were sitting outside around our crackling fire. Through the Namaqualand quiver trees we could see the sun sinking into the horizon while the full moon was rising behind us. Ice clinked in our glasses and the smell of grilling lamb chops filled the air. This was as close to paradise as anyone could imagine and yet the conversation was all about how bad things were.

Why are we like that? If you do even a little research you will find that the world is a better place now than it has been in the past. If you look at the accompanying illustration you will see how things have improved in some key areas of civilization, but you might still not feel happy.

Perhaps it is because there is a big disconnect between happiness and standard of living. It is clear that the average standard of living has improved over the last two centuries but our personal happiness has not necessarily kept up with it. The saying “the more you have, the more you want” springs to mind.

Why is this important? It is important because the knowledge that we have come a long way towards improved living conditions, as well as the notion that our work is worthwhile, forms the basis of our self-respect as individuals and is a necessary condition for improvement. That brings us back to the world of investing and two very important elements thereof, namely consumer and business confidence. If we are not happy with what is happening around us, we tend to become conservative in the way we invest our money. We increase our emergency reserves and businesses decrease their capital expenditure. The irony is that these actions have been proven to result in missing out on better returns and making us even more unhappy.

We often see that people who are very successful, are also very positive by nature. Something they all have is common it that they realized a long time ago that happiness and positivity is a state of mind, whereas the conditions in which you live are a reality; and that the latter should not overshadow the former.

The markets at the moment are at all-time highs. Borrowing a slide from the well-known Morgan Housel we can see this reflected in the S&P500.

If we have legitimate reasons in our personal lives that make us negative, angry and sad, we can only hope and try to sort them out. The world is a better place now than decades ago and our investments are doing well, all of which provide us with a solid foundation for the future.

Can you still remember those times when you did something wrong and your mother said, “Go to your room and wait for your father to come home!”. The worst part was the anticipation. You had no idea what was going to happen and it was impossible to not feel anxious. Sometimes you were lucky and all the worry was for nothing but sometimes you got what you deserved.

Depending on our personalities, we are all impacted by our present situation to some extent. When it comes to investments it is often a blessing to be ignorant of what the future might bring. Those of us who plan ahead and follow the current trends live in a perpetual state of anxiety because we always try to figure out what we need to do now for a positive outcome in the future, but the future is uncertain and there are millions of possible permutations.

If we tell you that the future is so uncertain that there are no financial models that can be run today that will accurately predict where the world economy will be after 2030, will it make you nervous? Or will you just throw up your hands and say, “Who cares!” The reality is that by 2030 machines will have become so intelligent that most of what drives economies today, will be determined by machines then – and we have no idea how that will impact humanity. If you are becoming anxious reading this, don’t. To worry about what might happen is a waste of time. What is not a waste of time, is to think about the future and change your plans as different scenarios unfold.

Just remember how adaptable we’ve always been and still are. In just 260 years we have come from horseback-riding to being astronauts. We have come from drilling for oil to harnessing the sun. We have come from waiting three weeks for a letter to having instant contact with someone anywhere on the globe. If you had not been paying attention as an investor, you might have missed out on superb investment opportunities such as selling your shares in horse saddles and investing in internal combustion engines; or selling your fax machine stocks and buying Apple shares. One of the most important qualities you can have in life is to not worry about things you have no control over, but to act decisively on those things you do have control over.

Things have been happening these past few weeks. In Cape town we have seen heavy rains, wind and snow. An assassin’s bullet grazed Donald Trump’s ear and investors have been selling big tech companies in the USA and buying smaller undervalued companies. To top all of this, Microsoft, banks and airports experienced a massive outage last Friday. The South African Reserve Bank has kept interest rates on hold and it is likely that they will only cut when the USA does so. With all of these things happening around us, it does seem that the core has remained the same. Equities as well as bonds are performing well; the rand is still struggling to get below R18/$; and both gold and Bitcoin have moved up a bit.

People are getting on with their lives and it is good to be in the moment, but as investors we have to always plan for the future. It is very likely that Donald Trump will be the next president of the USA. This will have an impact on all our investments and we can already see people rotating their positions in anticipation. “Make America Great Again” is still his campaign slogan so we don’t have to wonder who will benefit from his presidency. What we do have to wonder about, is whether the markets will react the same as last time, or whether the changes that have taken place since his last term will result in a different, more negative outcome.

If you have been wondering why your offshore equity fund is underperforming the S&P500 index, then consider the following explanation: the S&P500 index represents the 500 largest companies in the USA at any given moment. Currently, three companies are battling it out for the honor of being the largest, with the order changing almost daily depending on their share price. Those companies are Microsoft, Apple and Nvidia. If we add the next two in line, being Amazon and Alphabet (Google), we have five companies that make up almost 30% of the entire index – and therein lies the problem. If the fund you are invested in does not have a very large weighting towards these five stocks, your returns would not have been even close to the performance of the S&P500 index.

But, before you become too upset, please consider the accompanying performance spreadsheet of what we call the “equally weighted S&P index” relative to the usual market cap index.

The equally weighted index is the performance you would see if all the companies were the same size and their share price performance carried the same weight as the bigger companies. It is clear that over the last ten years the bigger companies performed better that the average company in the index and if you were not invested in them, you would have underperformed.

If we analyze this situation we come to the following conclusions:

• If you concentrate your investment into just a handful of stocks, you increase your risk a lot. It is always easy to identify the winners with hindsight.
• There were long periods of time where the smaller companies in the S&P500 did outperform the bigger companies (1974-1979 and 2009-2014).
• The winners over the last two years like Nvidia, Apple and Meta have been very volatile and never cheap. So you never knew when it was a good time to buy them.
• Almost all the offshore equity funds you can invest in are global funds and do not invest just in the USA. The USA has been the best performing market for quite a number of years.

When we invest, we have to consider more than just the maximum return we can generate. We have to consider whether you are at a time in your life when you have to create wealth or preserve the wealth you have created. We have to decide between investment in something with the potential to permanently destroy your capital; or something where any significant loss of capital would be just temporary and the investment would bounce back owing to its quality. We have to consider the fact that the current good performance of an investment might be temporary and not sustainable. At the end of the day it is important for us to know that the funds we invest in will produce consistent longer-term inflation-beating returns; rather than investing in those shooting-star phenomena which burn brightly but fade away rather quickly.

When Warren Buffett went shopping as a young man, he would always take out the dollar he was about to spend and look at it, knowing that he could turn that one dollar into two by the end of the year if he invested it. So by delaying the immediate gratification of a non-essential purchase, he could in reality get it for free. Now we know that there are very few Warren Buffetts around with such investment acumen, but the principle is one of the most important ones for young people to learn. Most of us cannot invest our money and expect to double it every year, and truth be told, we shouldn’t try because that will entail taking some serious risks, but understanding the fact that the power of compounding would make even a modest return turn into something significant if you give it enough time, is priceless.

The catch is that you have to start early in life to get the full benefit of compounding. The other difficulty is that when you are young, especially when you start earning your own money, not spending it on earthly pleasures is very difficult. How can you say no to your friends when they invite you to go to a pub for a few cocktails and then splurge some cash on a good steak dinner? One of the solutions to this problem might be to take the choice of saving versus spending away from the young adult, and to place it in the hands of the parents or grandparents. We all know that presents will be given and support provided by the elders during the year. Perhaps some of the money earmarked for those presents and support payments can be channeled into longer-term investments?

We have recently highlighted the type of returns certain asset classes can provide over time. If we take the past and project it into the future, there is no asset class that will not beat spending money on wasteful items. We don’t have to stop living a good life and treating ourselves to things we value, we only have to look at that rand we are about to spend and think about it for a while.

What would you advise yourself if you had one opportunity to go back 30 years? One thing is for sure, you will be very wealthy today because investing with hindsight is very easy. If we take some examples of what happened over the last 30 years, we see that inflation in South Africa averaged around 8%. That will imply that if you go back 30 years and tell yourself to invest in a 30-year fixed-term deposit at 8% because you didn’t think shares were any good, you would have had an 832% return over the 30 years. That sounds pretty good until you realize that you literally only maintained the purchasing power of your money. To put this into context; something that will cost you R1 million today, cost only R107 000 thirty years ago.

If we look at Gold we see that the price was $817 in 1994 and today it is $2374. This is a 190% return in dollars over the 30 years. If we add to this the depreciation of the rand against the dollar, we get to a 1420% return in rand. Just for interest sake, the rand was at R3.61 to the dollar in 1994. So investing in Gold would have been better than an 8% fixed deposit, but we have to remember that Gold is volatile. It went down to $467 in 2001 and it is only now back at the peak it reached in 2011.

Looking at the S&P500 index, we see an increase of 1092% in dollar. You might say that this is no better than the fixed deposit in South Africa with its 832% return, but you will be forgetting that you have to add the depreciation of the rand back. It is 10 times better than Gold and remember that the average inflation in the USA was only 2.34% which means that over 30 years you only had to double your money to maintain your purchasing power. But, it is also volatile. You had no return in dollars from 2000 till 2013. So if you weren’t patient, you would never have received the returns it offered.

Lastly we can look at the Technology index in the USA. The Nasdaq gained 2243% over the 30 years. It was also a bumpy ride and patience would have been key.

You can argue that there were many other assets to invest in that would have given you a much better return and you would be right. Some people made a fortune in property, and more recently some people made a fortune in crypto and meme stocks, but they all came with a lot of risk. The closer we get to retirement, the bigger the impact on our lives if we should gamble with our savings and fail. If we could go back 30 years, we would all tell ourselves to invest in the Nasdaq and then swop everything and go into Bitcoin in 2009, but what then.

The reality is that we cannot go back, we have to invest today with no certainty as to what will happen tomorrow. What we can learn from the past is that equities will give you inflation-beating returns if you are patient and give them some time to go through the bad patches. It also teaches us that starting early will give us the advantage of compounding returns and that you don’t have to be clever to build a very solid core investment portfolio. The last thing we can take from this is the fact that there will be opportunities to get into something exciting that will boost our overall returns, but because the risk will be greater, those opportunities should rather be taken early in life and not when time is no longer on your side.

One of the questions we are most frequently asked by clients is whether now is a good time to convert their rands into dollars to invest offshore. There are two big factors to consider when dealing with this question, namely:

• What is the conversion ratio between the rand and the dollar?
• Is it a good time to invest in offshore assets?

In answering the first question it is important to note that currency fluctuations are unpredictable and can impact returns over the shorter term. If you convert your rands into dollars and the next day the rand strengthens against the dollar, you will have an immediate currency loss on your investment if you should convert it back the same day. Taking an extract from one of Anchor Capital’s recent newsletters, we learn the following:
“Analysing the rolling one-year performance of the rand from January 2000 to February 2024 reveals that the local unit depreciated relative to the US dollar on approximately 67% of the measured days over one year. This likelihood increases significantly over longer periods, reaching 77% and 82% over three- and five-year rolling periods, respectively. These statistics suggest that, historically, the rand has been more likely to weaken than strengthen, reinforcing the notion that history is on your side when externalising your funds”.

It is clear that one should not wait for the rand to strengthen if your aim is to invest in offshore assets for the longer term, unless there has been a dramatic movement in the currency due to a clearly identifiable event, in which case one could wait for a normalization in currency levels.

The answer to the second question is of more importance. We have to start off by saying that it is very common for international assets like bonds and equities to increase in value at the same time that the rand strengthens against the dollar. So even if you do decide to wait for the rand to get stronger before you buy dollars, and you are lucky enough for this to happen, you will more than likely pay more for your bonds and shares once you do convert your rands into dollars. The decision to invest offshore should be based not on the level of the currency, but on the longer-term risk/reward you can get.

Over the last decade it has definitely been better to have been invested offshore, not only because the rand has weakened against the dollar, but also because offshore equities have performed better than local equities. Currently we believe that although there are companies in our local market that do offer value, the uncertainties facing our political environment cannot be ignored. We believe that there are many international companies offering similar or even better valuations than those available in South Africa, but in countries where the economic and political environments are much more stable and predictable than our own.

When deciding where to invest your funds, currency should not play a major role. It is more important to decide on the duration of your investment and the relative valuation of potential investments. If you live in South Africa, shorter-term investments and cash should be held in rands and only money earmarked for longer-term purposes should be invested offshore. For the time being, investing in American companies is still a good idea but countries like India, Indonesia, Vietnam and Korea do offer better value in some cases, with loads of potential.

Before investing offshore, you have to decide whether you want to invest directly offshore by using your discretionary tax allowance, or whether you want to invest indirectly by using a rand-denominated offshore fund. One of the big advantages of investing directly offshore is the fact that you do not pay tax on the currency gain over the period of the investment. Let us illustrate with an example:

You invest R100 000 when the dollar/rand exchange rate is $1/R10 directly into the XYZ world equity unit trust fund when the fund trades at $1 per unit. So you convert your R100 000 into $10 000 and buy 10 000 units, ending up with an investment of $10 000. Ten years later you sell your XYZ world equity fund investment when the dollar/rand trades at $1/R20 and the value per unit has increased to $5, realizing $50 000. When you convert you investment back into rand you get R1 000 000 ($50 000 x R20)

Because you made a direct dollar investment, you will be taxed on the dollar gain translated back into rands on date of sale. So the dollar gain was $50 000 – $10 000 = $40 000 and the $/R exchange rate was $1/R20 = R800 000 profit.

If you invested in the rand-denominated XYZ world equity unit trust fund, you will pay tax on the profit made from the fund as well as the currency profit. You invested R100 000 and sell for R1 000 000 so you made R900 000 taxable profit.

At the end of the day, with the current 40% inclusion rate of any capital gains made and a tax rate of 45%, you can pay up to R18 000 more in taxes just because you didn’t invest directly offshore.

It is important to note that due to personal circumstances, it might not be in your best interest to invest directly offshore and that the investment via a rand-denominated fund might suit you better. The ultimate goal is to get the offshore exposure if your personal investment plan requires it, no matter the vehicle.

We all know by now that different asset classes provide different benefits at different times. If we look at the accompanying graph, we can see that the longer-term winner has been the S&P500 index and cash the loser. It is also worth noting that all these asset classes, except for cash, have experienced periods of underperformance. Most recently we have seen some very positive moves in equities and gold, and some disappointing performances from bonds. If we want reasons for these moves, we have to look at historical and current developments. We usually look at graphs of historical interest rates, valuations, debt levels, inflation levels, GDP growth rates, unemployment levels and a thousand other indicators. What we sometimes neglect to take into consideration, are future developments.

There are times in our lives when something happens that negate all these historical data we analyze for answers because it creates an opaque, yet exceptionally powerful potential. We are at one of these inflection points with the birth of Artificial Intelligence. AI will have such a profound impact on our lives over the next decade or two, that it will necessitate the adjustment of historical data to create a new entry level for measurements going forward. Before we go into too much detail about AI, we have to acknowledge that we are not experts on the subject but due to the impact it is having on the world around us, we have to think about it deeply. What we do know, is that a lot of people will be replaced by AI, and a lot of new job opportunities will be created. Consider this simple example: the efficiencies of using AI will replace a 5-day workweek with a 4-day workweek. People will now have more leisure time, which will benefit the hospitality industry. Hotels, airlines, online travel sites, sporting events, music festivals and many more businesses will thrive, and any business supporting these will be caught up in the surge.

The point we are trying to make is that just relying on historical data to make future predictions can be very dangerous. If you don’t get the feeling that things are changing at an accelerated speed, then you just have to wait a little bit because it is going to catch up with you soon. Sometimes we just can’t see the potential in something. If we take Instagram as example: in 2012 Facebook (META) bought this video-sharing app for $1 billion. Personally I thought they had lost their way, because how were they going to make money with an app where people just shared a little video clip? Well, the answer, of course, was online advertising – in 2021 Instagram made $32.4 billion.

To take this discussion full circle, let’s get back to asset class returns. If you listen to market commentators, you will always get two different points of view, both of which are backed up by very solid historical data. This, of course, creates a market with some people who want to sell at the same time someone wants to buy. Over the shorter term these different opinions about things like inflation, interest rates, equity valuations, bond prices, geopolitical tensions, the level of your currency, the potential for GDP growth, unemployment and many more will prove one opinion to be right and the other to be wrong. But these small victories will not win you the war because things can change very quickly.

As individual investors the war we have to win is the ability to fund our required lifestyles with the growth generated by our investments for the rest of our lives. The only way to do this is to get the paradigm-shifting calls right. So what are those you might ask? Well, if we take some examples, in 1886 it was whether to invest in horses or the internal combustion engine; in 2007 it was whether to invest in the Apple iPhone or in Kodak film; and in 2023 it was whether to invest in companies leading the AI race like Nivida, Microsoft, Meta, Alphabet and Amazon.

Perhaps we should worry less about the valuation of big tech companies in the USA, or the falling profitability of Apple and Tesla in China, or even when interest rates are going to come down and whether we will see a mild recession soon; and rather worry about what will happen if the USA can’t repay their massive debt because the dollar has lost its status as the number one reserve currency, or if the rand depreciates with 100% due to bad policy decisions made by a desperate ANC government.

The bad news is that the future is uncertain, the good news is that it has always been. Most of the petty potential problems we fixate on will be solved by human ingenuity and most of the major disasters we have endured have made us stronger. We believe this will be the case going forward as well.

The world is a board game and we as normal citizens are not making the rules. As we have stated before, we cannot advise on or manage money based on the expectation that a calamitous event will occur. The most we can do as advisors, is to take the current situation and the most likely unfolding of potential unknown scenarios into account when structuring your financial roadmap. Charlie Munger, vice-chairman of Berkshire Hathaway and one of the wisest investors of the last century, passed away on Tuesday, November 28, at the age of 99. He often said that it is futile to make any investing decision based on forecasts of future results. That is an admission of ignorance, an understanding that the future is so unpredictable that it’s not worth even trying to predict it.

Being ignorant about the potential of our current financial system crumbling like a house of cards, prevents us from living in fear and squandering this one beautiful life we have. These potential threats to our immensely complex, man-made financial systems, can take the form of either natural disasters; or wrong or criminal decisions by the people who make the rules for this board game we live in (our governments); or a combination of the two, as we got a taste of with Covid in 2020.

If you are interested in the potential dystopian future that can result from an implosion of our financial systems, feel free to read books like Currency Wars by James Rickards; Endgame by John Mauldin and The Mandibles by Lionel Shriver. The main potential triggers for such an implosion will be too much debt and people losing trust in a major currency like the US$. As recently as 2008, we saw what too much debt can do to the world economies, when the global financial crisis rocked our world. Simplistically, what happened was that everything was going so well that people borrowed huge amounts of money from their banks to build houses. The banks created financial instruments called mortgage-backed securities and sold them to investors as a low-risk investment. When people couldn’t repay their mortgages and so many houses came on the market that valuations dropped, the proverbial bubble burst, and the world went into recession. Our whole financial system has little collateral backing it up. It is based on sentiment and promises.

The same happens to major companies every now and then. Just look at the disaster at Aspen and Tongaat when their debt became unbearable. Even on a micro scale you will see many households going under due to excessive borrowing. Another risk to our current investment stability is the strength of the US$. Because the US$ is the currency in which the majority of world trade is conducted, any instability or excessive weakening of the dollar can lead to spectacular fireworks. The USA’s debt is higher than its income and although it has always been high, the current level of 123% debt to GDP, is the highest it has been in a long time – and they continue to increase it. So if the US$ should weaken significantly in case, for example, BRICS succeeds in creating a new reserve currency and selling their US$ holdings in favour of the new currency, all the investments we have in US$ will collapse and our little dystopian story will come to fruition.

So at the end of the day we cannot invest based on what-if scenarios. Should we do so, we would have only a box of gold on an off-the-grid, self-sufficient smallholding somewhere in the bush, because anything else could in theory be wiped out overnight. The good news is that financial disasters are not that uncommon and we even have names for them, namely depressions and recessions. What we have learned from them is that the best way to avoid a complete permanent loss of capital when they happen, is to be well-diversified and to never allow yourself to be stretched too thin when it comes to your debt to income ratio.

In a recent Vestact newsletter, reference was made to a study by the Schwab Center for Financial Research which touches on one of the most important factors influencing your investment returns, i.e. when to start investing.
Giving full credit to Schwab, and Vestact for picking up on this study, we provide you with the following summary of the Schwab study:

We ran the numbers on market timing. Our findings? There’s a high cost to waiting for the best entry point.

Imagine for a moment that you’ve just received a year-end bonus or income tax refund. You’re not sure whether to invest now or wait. After all, the market recently hit an all-time high. Now imagine that you face this kind of decision every year—sometimes in up markets, other times in downturns. Is there a good rule of thumb to follow? Our research shows that the cost of waiting for the perfect moment to invest typically exceeds the benefit of even perfect timing. And because timing the market perfectly is nearly impossible, the best strategy for most of us is not to try to market-time at all. Instead, make a plan and invest as soon as possible.

But don’t take our word for it. Consider our research on the performance of five hypothetical long-term investors following very different investment strategies. Each received $2,000 at the beginning of every year for the 20 years ending in 2022 and left the money in the stock market, as represented by the S&P 500^® Index. (While we recommend diversifying your portfolio with a mix of assets appropriate for your goals and risk tolerance, we’re focusing on stocks to illustrate the impact of market timing.) Check out how they fared:

1. Peter Perfect was a perfect market timer. He had incredible skill (or luck) and was able to place his $2,000 into the market every year at the lowest closing point.
2. Ashley Action took a simple, consistent approach: Each year, once she received her cash, she invested her $2,000 in the market on the first trading day of the year.
3. Matthew Monthly divided his annual $2,000 allotment into 12 equal portions, which he invested at the beginning of each month. 
4. Rosie Rotten had incredibly poor timing—or perhaps terribly bad luck: She invested her $2,000 each year at the market’s peak
5. Larry Linger left his money in cash investments (using Treasury bills as a proxy) every year and never got around to investing in stocks at all. 

Naturally, the best results belonged to Peter, who waited and timed his annual investment perfectly: He accumulated $138,044. But the study’s most stunning findings concern Ashley, who came in second with $127,506—only $10,537 less than Peter Perfect. This relatively small difference is especially surprising considering that Ashley had simply put her money to work as soon as she received it each year—without any pretence of market timing.

 

Rosie Rotten’s results also proved surprisingly encouraging. While her poor timing left her $15,214 short of Ashley (who didn’t try timing investments), Rosie still earned about three times what she would have if she hadn’t invested in the market at all.

And what of Larry Linger, the procrastinator who kept waiting for a better opportunity to buy stocks—and then didn’t buy at all? He fared worst of all, with only $43,948. His biggest worry had been investing at a market high. Ironically, had he done that each year, he would have earned far more over the 20-year period.

We also looked at all possible 30-, 40- and 50-year time periods, starting in 1926. If you don’t count the few instances when investing immediately swapped places with dollar-cost averaging, all time periods followed the same pattern. In every 30-, 40- and 50-year period, perfect timing was first, followed by investing immediately or dollar-cost averaging, bad timing and, finally, never buying stocks.

In Brief:

• Given the difficulty of timing the market, the most realistic strategy for the majority of investors would be to invest in stocks immediately.
• Procrastination can be worse than bad timing. Long term, it’s almost always better to invest in stocks—even at the worst time each year—than not to invest at all.
• Dollar-cost averaging is a good plan if you’re prone to regret after a large investment has a short-term drop, or if you like the discipline of investing small amounts as you earn them.
• Lastly, it’s important to note that there’s no guarantee you’ll make money through investing in stocks. For instance, there’s always a chance we could enter another period like the 1960s through early 1980s.

There are two attention-grabbing wars being fought at the moment, with the Israel/Gaza conflict just over a week old. If we put aside our own thoughts about these wars and other major events in history, and just look at the impact they have on our investments, we shall see that most of these events have a negative impact over the shorter term, but even twelve months later this impact has already become minor compared to other influences.

The way our governments manage the economy can be much more damaging to our investments, and the damage can also last longer.

If we look at the United States we see that their debt is reaching epic proportions.

The interesting thing about debt is that it can be good up to a certain point, but like everything in life, too much of a good thing is bad. Another problem in the US is that their mortgage rate is 8.09%, the highest it has been in 23 years.

So, people who want to buy a house now cannot afford it, which forces them to pay higher rental rates. This keeps inflation high, which in turn keeps interest rates high. The upside for the US is that their economy is strong, unemployment is low and the consumer is still liquid. If you are a betting person, do not bet against their getting out of their debt problem.

South Africa, on the other hand, is suffering. Since around 2015, foreigners have been selling our stocks and bonds.

We all know that our unemployment is out of control (60% youth unemployment); our infrastructure is collapsing; and our government is siding with the likes of Russia, Palestine and China. On the positive side, our shares are very cheap with a P/E ratio of 8.8 compared to the world index P/E ratio of 15.4.

It is interesting to note that if you compare the share performance of the biggest emerging economy, China, with that of India, the latter has outperformed over the last three years.

Most investors trust the managers of the funds they invest in to make the right decisions. It is good to see that some fund managers have been increasing the international exposure of their funds over recent years. One of these funds actually have 43% local vs 37% offshore; compared to 70% local vs 13% offshore in 2007.