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Using ETFs to hedge against rand movements
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Using ETFs to hedge against rand movements

 

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The rand, infamous for its tendency to be erratic and incredibly sensitive, has been all over the place amid the uncertain local and global political landscape. Given the impact this has on market sentiment, it's natural for investors to seek out offshore options to hedge their portfolio.


“If you’re sensitive to political risk and rand weakness, you can look at offshore ETFs. They’re great for hedging yourself against uncertainty,” says Martin Strauss, a portfolio manager at Standard Stockbroking*.


There are offshore ETFs that can help you take advantage of those global markets. For instance, you may be wary of US uncertainty and prefer to look at Europe. Then the Deutsche Bank Euro Stoxx 50 might be what you’re looking at.
Perhaps you’d like some exposure to Asian markets, then the Deutsche Bank MSCI Japan could be the ETF you settle on. 


For a lot of investors, the US is still an attractive investment destination, political noise aside. The CoreShares S&P 500 ETF could give you the exposure you need.


If you’re not willing to limit yourself to particular geographic regions, the Deutsche Bank World may be better suited for you. This index tracks the performance of global equity markets giving you exposure to key markets around the globe.


Strauss says a lot of the companies in the Top40 have operations offshore, which means you can gain both offshore and local exposure. “There are a lot of companies that are rand hedges in the top 40 such as Richemont, Naspers and British American Tobacco,” he adds..


Offshore ETFs available on OST:

 

  • CoreShares S&P 500 – tracks the S&P 500
  • CoreShares S&P Global Property – tracks the Top 40 property companies in developed markets around the world
  • Deutsche Bank Euro Stoxx 50 – blue-chip index in Europe tracking 50 euro-zone companies
  • Deutsche Bank MSCI Japan – replicates Japan’s MSCI index
  • Deutsche Bank FTSE 100 – replicates price and yield performance of the FTSE 100
  • Deutsche Bank USA – replicates performance of US equity markets
  • Deutsche Bank World – measures global market equity performance

For more information on these ETFs, please visit: securities.standardbank.co.za/ost   
*Standard Stockbroking is a division of the Standard Bank Group.

 

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