How much global exposure is enough?

One of the most common conversations advisers have with South African clients is about global investing. It usually starts with a simple and very reasonable question: “How much should I invest globally?”

Behind that question sits a genuine concern about long-term security, purchasing power and diversification. Clients are not trying to time markets or speculate on currencies, they are trying to make sense of an increasingly global world while living and spending in South Africa. As advisers, your role is to help translate that concern into a portfolio that is sensible, resilient and aligned with each client’s personal circumstances.

The reality is that global exposure has become a structural part of financial planning, rather than a tactical decision based on short-term views. Thinking about it in that way changes the conversation meaningfully. Instead of searching for a single “correct” number, we can focus on why global exposure is needed, what role it should play, and how it fits into a client’s broader plan.

Why global exposure matters for South African investors

South Africa represents a very small part of the global economy, and the local market reflects that. While the JSE offers quality companies and attractive opportunities, it is also narrow and concentrated, with entire global growth sectors simply not available locally. This means that portfolios invested only in domestic assets are, by definition, exposed to a limited opportunity set.

Including global exposure allows portfolios to access a much broader range of industries, business models and earnings drivers. It introduces diversification beyond geography alone - diversification of economic cycles, innovation trends and valuation regimes. Most importantly, it also helps reduce reliance on a single currency over long periods, particularly when clients’ future needs may not be perfectly matched to the rand.

None of this implies a negative view on South Africa. Global investing is not about replacing local assets or expressing a lack of confidence. It is about reducing dependence on any one outcome and building portfolios that are better equipped to navigate different environments over time.

Understanding how global returns are experienced locally

For South African investors, global returns are always experienced through two lenses at the same time. The first is the performance of the underlying global asset - for example, global equities priced in US dollars. The second is the movement of the rand against that currency.

These two elements combine to produce outcomes that can sometimes surprise clients, particularly over shorter periods. Strong global markets do not always translate into strong rand returns, and global market drawdowns can occasionally be softened by a weaker currency. This interaction is not a flaw in global investing; it is simply how global portfolios behave when viewed from South Africa.

What matters for advisers is recognising that global investing always involves both asset risk and currency risk, and that the balance between the two changes over time. In the short-term, currency movements can dominate outcomes. Over longer horizons, the growth of the underlying assets tends to play a more meaningful role.

This is why global investing can feel uncomfortable at times, even when it is doing exactly what it is supposed to do in a portfolio.

On timing the rand and designing around uncertainty

The rand is influenced by a wide range of factors: global risk sentiment, interest rate differentials, commodity prices, US dollar cycles and domestic developments. It is liquid, volatile and highly responsive to global events. Predicting its short-term movements consistently is exceptionally difficult.

Rather than trying to forecast currency moves, advisers add more value by helping clients design portfolios that are not overly dependent on getting those moves right. Time horizon, cash flow needs and behaviour under stress all matter far more than precision when it comes to currency calls.

This shift from prediction to structure is a powerful one. It reframes global exposure as something to be planned for rather than timed, and it allows clients to stay invested through inevitable periods of volatility.