Investing offshore is necessary to achieve your financial goals

Why should SA investors consider investing offshore?

Investing in shares is a necessary consideration for those who want to achieve their financial goals. Many tend to default to investing excess funds in shares on the Johannesburg Stock Exchange (JSE), as they are familiar with these listed companies, but this limits the diversification benefits that can be enjoyed by investing in offshore shares. Diversification across economies, political jurisdictions and asset classes is achieved when investing a portion of your total assets offshore – often resulting in an investment portfolio that has greater resilience to global macroeconomic events.

Economic Diversification

Economic diversification is achieved by investing in offshore markets as this ensures greater portfolio resilience, as investment returns aren’t tied to the performance of a single market.

Political Diversification

Political diversification is similar to economic diversification but focuses on reducing a portfolio’s exposure to a single country or political jurisdiction to navigate inherent political risks that are often reflected in its currency. If you want to limit your rand exposure, consider investing directly in offshore markets, as this reduces currency risk and enhances investment returns by tapping into a wider range of global opportunities. This approach helps investors to protect their portfolios from localised downturns, benefit from currency diversification, and achieve more stable long-term growth.

Asset Class Diversification

While approximately 400 South African companies from different sectors are currently listed on the JSE, offshore markets offer access to thousands of global companies that are not available locally. To put this into perspective, the MSCI World Index includes 1 429 global companies, and the World Federation of Stock Exchanges boasts approximately 58 200 companies listed worldwide. By adopting a global outlook, you can diversify your portfolio and access industries and innovations that are simply not available on the JSE.

Artificial intelligence (AI) is a textbook example of how SA investors stand to benefit from diversifying their portfolios to include global companies. The rapid progress in this field began in the late 2010s and gained international prominence by the early 2020s, as chatbots went truly viral, global governments began taking AI risk seriously, and people began to understand what AI really is and what it can do.

Fast-forward a few years, and big tech giants are currently locked in a fierce competition to outperform one another in AI. In 2025 alone, the US’s largest tech companies have lavished $155bn on the development of artificial intelligence – more than the US government has spent on education, training, employment and social services combined in the 2025 fiscal year to date. There is no sign of any slowdown either. Indeed, the most recent financial disclosures of Silicon Valley’s biggest players indicate that the race is about to accelerate into the hundreds of billions of dollars annually. The latest quarterly financial reports for Meta, Microsoft, Amazon and Alphabet (Google’s parent company) all disclosed that these companies’ year-to-date capital expenditures already total tens of billions of dollars each.

The meteoric rise of AI in recent years has created an entirely new frontier for global investment, and local investors need to ensure their investment portfolios have exposure to these types of companies to benefit from such growth opportunities.

“Diversification and globalisation are the keys to the future.” – Fujio Mitarai

Conclusion

Diversification limits the negative effects of market fluctuations, enabling investors to achieve more stable returns in times of crisis. It also helps optimise investment returns by making it possible to take advantage of opportunities in different sectors and regions. Sector diversification lowers your portfolio’s risk because different asset classes do well at different times. If one business or sector fails or performs badly, you won’t lose all your money if your investments are adequately diversified. Having a variety of investments with different risks will balance out the overall risks in a portfolio. Investors who want to ensure their portfolios are set up for the long term and deliver on their goals need to consider diversifying a portion of their portfolio by investing in global markets.