BNC#6 Magnus Heystek – Investment masterclass, navigating the maze of the financial world

In his riveting address at BNC#6 in Hermanus, renowned fund manager and wealth advisor Magnus Heystek delved into the intricacies of the financial world. With a keen focus on distinguishing independent advisory services from traditional fund management, the Brenthurst Wealth director and investment strategist emphasised the importance of navigating the vast array of investment options both locally and globally. Heystek’s insights on offshore investments, economic cycles, and the evolving South African landscape provided valuable guidance for investors seeking to safeguard their wealth and capitalize on emerging opportunities.

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Edited transcript of Magnus Heystek’s keynote speech at BNC#6 in Hermanus ___STEADY_PAYWALL___

00:07 Thank you and good afternoon, ladies and gentlemen. I’m a fund manager and advisor. I work solely for my clients. It’s crucial to understand this distinction from regular fund managers who operate within specific mandates. In South Africa, we have around 1,600 funds to choose from, and globally, there are about 30,000. It’s challenging to identify the good from the bad, but that’s our focus at Breitest.

00:36 Before I continue, a shoutout to Alec, a longtime friend and entrepreneur. He’s been a pioneer in independent media with BizNews, offering a platform for factual information and independent thought.

01:06 Let’s talk about the economy. It’s like a Rorschach test; different people see different things. Similarly, financial markets are vast and complex, making it impossible to be 100% accurate all the time.

03:29 Let’s reflect on South Africa’s financial history, especially post-1997 when exchange control eased. We’ve experienced various economic cycles, from commodity booms to financial crises.

05:24 Around 2011-2012, I became interested in global investment opportunities. The US market was booming, offering substantial returns. However, many local fund managers weren’t equipped to navigate global markets effectively.

06:23 Recently, there’s been a shift with more fund managers offering offshore investment options. However, this should have happened earlier, given the significant returns in global markets over the past decade.

07:52 The US market has seen remarkable returns, far surpassing other international and local markets. South African investors who ventured offshore have benefited greatly.

08:23 Considering the dollar’s inflation rate is crucial. South Africans focusing solely on rand returns may not realize their actual wealth decline when factoring in dollar-denominated expenses.

10:59 Since the relaxation of exchange controls in 2015, more South Africans have moved funds offshore, recognizing the advantages and mitigating local risks.

12:59 Many South Africans unknowingly spend a significant portion of their income on dollar-linked expenses. Factoring in dollar inflation, their actual wealth decline is more pronounced than perceived.

14:28 Investing offshore, especially with discretionary capital, has proven beneficial for clients, protecting their wealth against local economic challenges.

16:50 Law and order, crucial for investment stability, are lacking in South Africa, impacting investor confidence and market performance.

18:46 The discrepancy between local market expectations and actual returns highlights the challenges faced by advisors in guiding clients’ investment decisions.

20:42 South Africa’s evolving political and economic landscape poses risks that investors must consider, especially regarding asset protection and future financial stability.

22:05 Given ongoing uncertainties, advising clients to diversify offshore remains prudent, safeguarding their wealth and financial future.

23:55 While challenges persist, opportunities exist globally, like the emerging ‘granolas’ in European markets, offering alternative investment avenues beyond traditional options.

In conclusion, as advisors, we must stay vigilant, considering global trends, economic realities, and client objectives to provide informed and effective investment guidance. Thank you.