How to protect and diversify your investments in uncertain times

*This content is brought to you by OrbVest

By Devon Thomson*

The migration of funds out of SA

As South Africans are still battling load shedding and a desperately incompetent and corrupt government, the trend of migrating funds offshore looks set to continue this year. The new year refreshes our offshore allowances, with the reserve bank allowing a single discretionary amount of R1million for the calendar year that South African taxpayers can move offshore, and an investment allowance of R10mil subject to some additional scrutiny by SARS.

2023 Financial Outlook in USA

Interest rates in the US look set to increase at a slower rate with the next Fed hike predicted to be 25 basis points at the next meeting on 1 Feb 2023. The general feeling amongst commentators is that we should be in for a period with no increases, followed by interest rate decreases again as inflation is brought under control. The inflation data reported on Thursday 12th  Jan revealed CPI in USA decreased last month for the first time since May 2020. Inflation peaked last year at 9.1% in June but has since dropped to 6.5% in December 2022.

What does this mean for the U.S this year?

Fed governor Michelle Bowman said that while inflation was coming down, “we have a lot more work to do” and that once rates had peaked, they would have to stay there for some time. She added that “unemployment has remained low as we have tightened monetary policy and made progress in lowering inflation”. “I take this as a hopeful sign that we can succeed in lowering inflation without a significant economic downturn,” she said. This bodes well for the US and while interest rates may not be decreasing just yet, all signs point to stabilization and the eventual decrease of interest rates.

Why investors continue to invest in the Medical Real Estate sector in the USA

Investors still see the MRE sector in USA as resilient and a safe-haven, and rightly so. With the ageing population, increased life expectancy and advancements in modern technology, the sector still holds a strong demand, offering consistent returns to investors that are unaffected by the volatility of the equities and commodities market. Coupled with the strength of the US$, it’s understandable why so many investors are growing their wealth in this sector.  The bloodbath of 2022 in the markets saw the DOW falling by around 9% and the S&P 500 about 20% while the Nasdaq Composite Index fell 33% (as can be seen in the graph below).

According to the financial times, global stocks and bonds lost over $30 Trillion in value from their peaks. While 2022 was a year to forget, it reminded us that diversification is key in any investment strategy, and that should include investment in different currencies and countries. If you’re buying more local assets in SA, you’re still stuck with rand denominated investments. While it can be daunting, companies like Orbvest make it easy for local South Africans to diversify into a sector that previously was very difficult to get into.

What Orbvest offers:

ODH5.2 – A diversified portfolio of over 20 buildings and over 100 tenants, spread across multiple different states across the US, minimizing risk as much as possible. Providing a projected cash on cash of 7% per annum, this option offers very consistent returns as demonstrated over the past two years since its inception.

Med 40 – For those looking to build their own portfolio of investments over time and extract a slightly higher return, Med 40 offers a standalone building in Albuquerque with a strong tenant mix, long leases in place and the expected return of is in excess of 7% per annum with an expected capital gain after 5years of 30%.

If you’re looking to diversify your portfolio, protect and grow your wealth in a resilient sector, email [email protected] for more information.

OrbVest SA (Pty) Ltd is an authorised Financial Services Provider. The content and information herein contained and being distributed by OrbVest is for information purposes only and should not be construed, under any circumstances, by implication or otherwise, as advice of any kind or nature, or as an offer to sell or a solicitation to buy or sell or to invest in any securities. Past performance does not guarantee future performance.

Returns are taxable and will be taxed as dividends from a foreign source, ordinary income or capital gains, depending on your tax residency. OrbVest is not a tax and/or legal advisor. Owing to the complex tax reporting requirements associated with private equity and private real estate investments, investors should consult with their financial or tax advisor or attorney before investing.

For members investing via the particulars of the investment are outlined in the property supplement, a private placement memorandum or subscription agreement, which should be read in their entirety by the proposed investor prior to investing and having obtained independent advice.

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