The Best Performing Unit Trusts Global Equities. In an age of globalization, limiting your investments to domestic markets may be a missed opportunity. For South African investors, the Global Equity General Unit Trust Category presents an appealing and convenient pathway to international exposure. Many of these have become known as ‘feeder funds’ to the actual portfolios which are managed and run in offshore jurisdictions. What that means is you’re investing Rands into an offshore fund, without first moving your money offshore and investing in USD/GBP/EUR or whatever. That makes it quick and simple (and accessible to all), without some of the complexity involved when externalising those funds first. And investing offshore has become a must – not a nice to have – for all the reasons widely known and discussed. While retirement funds can now hold up to 45% of their assets offshore, which means you will probably have exposure to some of these funds indirectly already – we repeatedly highlight investing offshore with your discretionary savings is something everyone should be doing as well.
The Significance of Offshore Equities for South Africans
While the JSE has its merits, it represents a small slice of the global economic pie. Offshore equities offer diversification not just in terms of geography but also sectors, giving you access to industries and technologies that may be under-represented locally. Investing globally can act as a hedge against local economic uncertainties, political instability, and the devaluation of the Rand.
Ease of Investment
One of the advantages of Global Equity unit trusts is that they provide a straightforward gateway to international markets without the complexities of moving money offshore (although that remains our preferred strategy once your income level and/or wealth warrants it). Investing in these unit trusts is as simple as investing in any South African-based unit trust, eliminating the need for tax clearance from SARS (once you go above your R1 million annual discretionary allowance) or complicated tax reporting (even though these days it’s not that complicated and we help our clients with that).
Devaluation of the Rand
The Rand has historically been a volatile currency, subject to long-term depreciation. 10 years ago the USD/ZAR exchange rate was 10.32. As of today, it sits at 19.31. You do the maths and what that means to your global purchasing power, ability to travel and achieve or maintain reaI financial security. Investing in global equities offers a hedge against this currency risk. While your offshore investments may appreciate in value, you could also benefit from any weakening of the Rand, as your global assets would then be worth more in local currency terms.
Understanding the Tax Basics between Investing Direct Offshore and Investing Rands Offshore via a Feeder Fund
One of the reasons why we prefer direct offshore exposure whenever possible for our clients (aside from the security of having your money outside local borders) – is the impact of currency fluctuations on your investment returns and the consequent tax implications. Returns calculated in hard currency (e.g., USD when your money is actually offshore) – are not subject to exchange rate fluctuations. In other words, if your USD investment appreciates or depreciates by 10% – that is your gain or loss and makes the tax calculation simple. If investing offshore in ZAR – a 10% gain in USD terms could be boosted or dampened by Rand volatility. If the Rand say depreciates by 5% during the same time frame, your gain is suddenly 15%. If the Rand strengthens by 5%, your gain is now only 5%. Not the end of the world, but not ideal either.
Unveiling Great Investment Opportunities
Global Equity unit trusts offer South African investors a ticket to participate in the growth stories of powerhouse companies like Apple, Amazon, and Tesla—entities not listed on the JSE. This allows you to tap into disruptive technologies and trends that are shaping the future, from clean energy and electric vehicles to AI, e-commerce and cloud computing.
Criteria for "Best Performing" Unit Trusts in the Global Equity Space
Choosing the ‘best performing’ unit trusts requires a more nuanced approach when considering global options. It’s not just about returns but also about risk diversification, currency impact, and geopolitical considerations. In this article, our focus remains on long-term annualized returns in the global equity general category, just to get a sense of which funds and asset managers are delivering results and outperformance relative to their peers. We used data from Morningstar and tried to isolate the retail share class of a fund where possible.
Top Picks in Global Equity Funds
Based on our analysis, some of the standout performers in this category include the PSG Global Equity, Emperor IP Global Equity, Sygnia FAANG Plus Equity, and Old Mutual Global Equity Funds. These funds not only offer robust returns but also a diversified exposure to global markets, making them an excellent choice for South Africans looking to invest internationally. A few additional things worth pointing out here are that some of the popular and highly regarded foreign asset managers like the Fundsmith, T Rowe Price, and Lindsell Train have only introduced feeder funds to South African investors recently so they don’t show up in longer-term performance stats on Morningstar yet. And many of the funds under the banner of a local company – like the Old Mutual Global Equity Fund – are actually managed by foreign asset managers (in this case Jupiter Asset Management).
Best Performing Global Equity Unit Trusts over 3 Years
The PSG Global Equity and Ranmore Global Value fund lead the way in returns over the last 3-years with amazing returns of over 20% annualised. Interesting to note the dominance of value names in this list as we’ve seen value as a theme come back into favour in a higher interest rate and inflation environment.
Best Performing Global Equity Unit Trusts Over 5-Years
The Sygnia FAANG Plus Fund leads the way thanks in no small part to the parabolic moves seen this year in some of the Mega Cap tech names like Nvidia. Looking at the rest of the funds, most are what we think of as boutique managers, which illustrates that often looking beyond the household names, can help you find options that can lead to superior returns.
Best Performers over 7-Years
Again, a mix of of a couple of more household names mixed with the smaller boutique managers. That’s why from a portfolio construction perspective, being able to blend different funds that have different styles and philosophies is a real strength. This is where using the capability of professionals who can do this level of research is a real win and is seeing disctretionary fund managers increase their popularity (against trying to pick single funds).
10-Year Returns Compared
The number of funds in this category that have a 10-year track record are actually quite small. This category of funds has only started to become really popular over the last 5 years or so when you look at how many more funds are available to invest in today, compared to what they were a decade ago. That’s why the names here are all from big local managers, because the boutique names (and those from foreign managers) only launched funds in this space more recently. Still, the returns delivered by the like of the Old Mutual Global Equity, Ninety One Global Franchise, and Nedgroup Global Equity Funds are impressive.
Read Next: The Best Performing Unit Trusts in the SA Equity General Category
How to Start Your Global Investment Journey
Investing in these unit trusts is as straightforward as making a local investment. Whether you prefer a lump sum or a monthly investment, the process is typically hassle-free. But simply picking funds past on past performance is a recipe for disaster because the best performing global equity funds over the next 10 years are likely to be very different to those on this list. Understanding your lifestyle, needs and goals is what really matters so that a portfolio can be built to achieve that. What we like to think of outcomes based investing and planning.
Conclusion
For South African investors, Global Equity General unit trusts offer more than just diversification. They provide a hedge against local economic and currency risks and open doors to global opportunities that are otherwise hard to access. In a world teeming with possibilities, these unit trusts make going global easier than ever. But with so much choice, there is complexity, which is why at Henceforward we spend a lot of time working with our clients to build investment portfolios aligned to their beliefs, needs and risk tolerance.
Disclaimer: Never invest in a fund solely based on past performance, this article is for information purposes only and should not be construed as advice.
Carl-Peter Lehmann
Carl-Peter has over 20 years investment and financial planning experience, including having worked for some big foreign instutitions looking after client portfolios in excess of of USD 100 million. Investing globally is a big passion of his and someting he loves helping his clients with.
