Why invest offshore?

3 Reasons to leverage international investments

High net worth individuals across the African continent share a number of similarities. They have worked hard to build their wealth as entrepreneurs and executives, and many of them have taken risks to do so. The challenge is that many African countries experience volatile exchange rates and do not have direct access to more mature and regulated markets. As a high net worth individual, one of the ways to mitigate these risks is to invest abroad. 

PROTECTING AND GROWING WEALTH FOR FUTURE GENERATIONS

Investing abroad refers to investing in a jurisdiction outside of your country of residence. There are a number of reasons why this can be an important element in an overall investment strategy, particularly if your investment goal is to both protect and grow your wealth for future generations. According to Andrew Sheppard, Wealth Advisor, International Wealth and Investment, Standard Bank, here are three key factors you should consider.

1. Investing abroad is a key component of diversification

There are many ways to diversify investments, including by region, types of investments, industries and markets and currencies.  Currency devaluation protection, particularly for investors who reside in countries that are subject to more volatile exchange rates, is a particularly attractive reason to choose to invest abroad.

“All markets experience volatility, but when international events impact stock prices, regions that are subject to greater exchange rate fluctuations may experience greater unpredictability. Diversification ensures that an investor’s funds are spread out and therefore not subject to any one region or currency’s potential volatility and investing abroad can give investors comfort that their funds are invested in a more stringently regulated environment,” advises Sheppard. 
 

 2.    Investing abroad offers greater liquidity

“Onshore investments – even if they are in a different currency, such as US dollar-based bonds – are still subject to local volatility because they can only be sold in-country,” explains Sheppard. “We’ve seen investors who are unable to unlock the liquidity of their in-county investments because they could not find in-country buyers able to purchase bonds with US dollars, for example. 

“Investors who hold these same bonds in an international jurisdiction with access to global markets will find that there is greater liquidity.”
 

3. Investing abroad offers an established regulatory environment

International financial centres, such as Jersey, are established financial hubs that operate within, and have access to, global markets. 

“Jersey is a UK crown dependency with access to international markets, including the UK, EU and the United States. It has its own government, laws and a robust regulatory environment,” says Sheppard.

“The stability offered by well-regulated and transparent environments such as Jersey protects the wealth of investors whose long-term goals are as focused on protecting their wealth as growing it. Access to lending for investment in established property markets, and international stock exchanges also provide the potential for long-term growth.” 
 

Disclaimer

Standard Bank Jersey Limited is regulated by the Jersey Financial Services Commission and is a member of the London Stock Exchange. Standard Bank House, 47-49 La Motte Street, St Helier, Jersey, JE2 4SZ. Registered in Jersey No 12999.
This document does not constitute an invitation or an inducement to engage in investment activity and is presented for information purposes only. Investment should only be undertaken following the receipt of advice from an appropriately qualified investment professional.
The value of investments may fall as well as rise and investors may get back less cash than originally invested. Prices, values or income may fall against the investors’ interests and the performance figures quoted refer to the past, and past performance is not a reliable indicator of future results. Investments may be quoted in foreign currencies and investors should be aware that the changes in rates of exchange may have adverse effects on the value, price or income of the investments.