Offshore Investments Soar as Global Economic Risks Mount

As international economies face persistent instability, investors are increasingly seeking ways to safeguard their assets. Experts recommend diversifying portfolios with offshore investments, which may offer access to sectors like technology and healthcare unavailable locally, potentially improving returns while mitigating risk.

The Rising Need for Diversification

The instability in global economies in 2025 encourages investors to protect themselves from risk. Many high-net-worth individuals are looking to diversify their holdings and reduce their exposure to local risks, such as unstable currencies, high taxation, and political uncertainties.

Offshore investments provide access to international sectors and industries. This helps them benefit from growth opportunities that are absent within the local economy. This strategy lowers their risk profile and provides exposure to stronger, more diverse economies.

“There’s been a major increase in geopolitical risk,” said Stefan Engelbrecht, portfolio manager for Mazi Nexgen at Mazi Asset Management.

Expert Insights on Navigating Uncertainty

Chris Eddy, head of investments at 10X Investments, agreed with Engelbrecht, pointing to current risks such as inflated US equity valuations, a weakening dollar, and political instability in key markets like the US. He noted that US equities are in the 90th percentile of historical valuations, and the dollar is still expensive, which might suggest muted future returns.

“From US-China relations to Trump’s trade policies and court rulings, the volatility is high,” said Eddy.

“From US-China relations to Trump’s trade policies and court rulings, the volatility is high,”

—Chris Eddy, Head of Investments, 10X Investments

In South Africa, high real interest rates offer an opportunity. Eddy stated, “You can get inflation-plus-5% on local bonds, that’s extremely attractive.” Globally, many investors have increased their interest in gold, which reached an all-time high in May 2024, trading at over $2,450 per ounce (World Gold Council 2024).

Strategies for Wealth Preservation

Experts stress that relying entirely on a small economy isn’t sensible. Engelbrecht advised sticking to one’s investment process and remembering that economies tend to recover, even from political turmoil. He said, “Diversify across geographies, stick to your valuation metrics, and avoid flip-flopping between styles or reacting to headlines.”

Dawie Roodt, Efficient Group chief economist, believes there are still many investable companies on the JSE. He stressed that investors should stick to highly liquid stocks that they can sell at short notice. He also said that investing in rand hedge stocks is a way to protect them from the currency’s depreciation.

Rand hedge stocks are listed in South Africa but earn a significant portion of their earnings outside the country in dollars, euros, or pounds. Examples include Naspers, Prosus, Richemont, Anglo American, AB InBev, BHP Group, and Glencore.

The overall consensus suggests that remaining calm during uncertainty is the best strategy. Engelbrecht said, “Investing is simple, but it’s not easy. Emotion is your enemy. Sometimes the best decision is to do nothing at all.”

“Build a well-diversified portfolio, manage risk wisely, and focus on your long-term goals. That’s how you protect your wealth,” Eddy added.