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SaurusDNA

TFIA ETFs - Local vs Global exposure

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The following discussion is for a TFIA ETF portfolio that I expect to grow for the next 20 years at least.

 

I'm finding it very difficult to decide what percentage of my ETF TFIA portfolio to put in global ETFs and what percentage in local ETFs.

 

Most people I ask immediately say 50/50, because whichever way the Rand goes, you're covered. However, this is not the case, as much of our "local" companies derive much of their profit from offshore branches. Thus, a 50/50 portfolio is heavily weighted in offshore exposure.

 

ETFSA suggests that 30% of one's exposure should be offshore but doesn't give reasons why.

(source: http://www.etfsa.co.za/docs/PortManServ/Global_ETF_managed_portoflios_brochure_jun2017_v2.pdf)

 

I think one's choice should be guided with knowledge of how much "local" investment is actually hidden offshore investment, but this information is hard to find.

 

Maybe the 30% global suggested by ETFSA is the way to go, but I can't help but feeling it might not be enough.

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If you look at the fact sheets for most balanced funds you'll see that they all seem to have a lower offshore exposure than domestic. Probably because most of the JSE is getting money from offshore anyway.

 

EDIT *non reg 28 balanced funds

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I like to look at my overall picture - as in looking at where my RA is invested, and use that when considering where I should focus my TFIA. Since RA's can only be exposed 30% (IIRC) to offshore, I focus a little more on offshore in my TFIA (ASHGEQ)

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