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Back to News Moriah Global ZAR vs USD
9 Nov 2018
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Dear Client

 

One of our clients who is invested in Moriah Global FoF, have asked us whether he is invested in Moriah Global ZAR or Moriah Global USD, with reference to our previous newsletter. We thought that our answer to him here below, may be helpful to some of our other clients who also have investments in Moriah Global FoF.

 

We do not have a Moriah Global ZAR fund, only a Moriah Global USD fund. We only wanted to explain to clients what the growth on the Rand would have been had it been invested on 1 Jan 2018 in Moriah Global FoF, namely that these Rands would have grown with 25.31%, because over and above the 9.54% USD growth of the Moriah Global FoF, the Rand depreciated with 15.77% against the USDollar, which means that the client who had invested his Rands in Moriah Global on 1 January 2018 and have decided to withdraw it on 30 September 2018, would have earned 9.54% + 15.31% = 25.31% in ZAR and that after the recent worldwide market correction!

As the Rand usually depreciates against the currencies of the more efficient first world economies (a bit more than 5% depreciations per annum, against the USD, over the past 40 years). South Africans who have invested their Rands in quality offshore funds, especially USD Denominated funds have had the great advantage of Rand depreciation, but one should take into account, where the Rand have depreciated more than 5% per annum, as above mentioned, the Rand may make a comeback of 15% -5% = 10%, especially when the socio-political situation in South Africa normalises.

 

As mentioned previously, some of the other benefits are:

 

  1. There are a handful of offshore funds locally registered from which we can buy for South Africans via local administrators, like AIMS of ABSA, but if expropriation of land without compensation should go wrong, as in Zimbabwe, where the Zim Dollar became worth less than the paper it was written on, the SA reserve bank can do what the Zim bank had done, namely to instruct local registered offshore funds to repatriate their Dolllars back to ZAR.

 

  1. When we pick funds via offshore jurisdictions like Isle of Man, Hong Kong, Geurnsey and lately Mauritius, we are not limited to the few offshore funds registered in South Africa, we have access to funds worldwide, like the Berkshire fund of the famous Warren Buffet, which is not registered in South Africa.

 

  1. In the mentioned jurisdictions there are much less regulations than in South Africa, for instance we have bought the Berkshire fund of Warren Buffet, which we would not be able to buy in South Africa, even if the fund was registered in South Africa, as the Berkshire fund is not a unit trust fund.
  1. In south Africa regulations do not allow investors to own investments jointly, which is allowed in the offshore jurisdictions, with great benefits if one of the owners should pass on as the investment will not become part of the frozen estate, which can take years to unwind in the new South Africa and which entail costly procedures.

Friendly greetings

 

Andre

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