High-quality multinational market leaders are the first choice of many investors wanting to build an offshore investment portfolio and grow their wealth over time.
There are a number of potential challenges, including working out which shares to pick and high minimum investment amounts. Many investors would prefer to hold the investments in their own name rather than indirectly through funds.
CybiWealth CEO Scott Cooper says these are some of the issues that prompted them to come up with a managed offshore share portfolio consisting of high-quality, multinational companies such as Coca-Cola, Nestlé, Unilever and L’Oréal.
While denominated in British pounds, half of the portfolio is exposed to the US, 25% to the UK, and 25% to the rest of Europe. “All underlying investments are well-established multinational companies with excellent track records,” Cooper says.
“They are predominantly market leaders in their given fields, have global distribution networks, and sell their brands around the world. These companies are diversified across many products and countries, making them more resilient to changing economic conditions, technologies and trends.”
CybiWealth is a purely digital investment portal with investment via electronic funds transfer or debit or credit card.
Aimed at young professionals, entrepreneurs and those wanting to start investing offshore, investors can invest from £500 with the benefits of direct share ownership and lower fees backed by choices made by a team of investment professionals.
“This is not a fund – that is what makes us different,” Cooper says. Clients are beneficial owners of the shares, but the investments are chosen by an experienced investment team at FIM Capital based on the Isle of Man. Marriott Asset Management has a contractual relationship with FIM to distribute CybiWealth in South Africa.
“Instead of owning a fraction of a collective investment scheme or a mutual fund, CybiWealth’s share portfolio allows you to directly own shares in global companies,” he says.
The portfolio includes many household names including Procter & Gamble, Johnson & Johnson, Pfizer and L’Oréal. “A large part of what we do is about certainty of outcomes,” Cooper says, hence the focus on well-known, longstanding multinational companies. There are tech investments in the CybiWealth portfolio, but not the FAANG (Facebook, Amazon, Apple, Netflix and Google) shares found in many portfolios. “When it comes to tech, we look more to enablers in the tech space such as Honeywell, United Technologies and Texas Instruments.” Cooper says.
“We prefer these types of companies. Apple is a brilliant company, but determining whether the next iPhone is a success or failure is a risk and we don’t want to put ourselves in that sort of position when handling client funds.”
The relatively low minimum investment and fees are a function of the completely digital set up. “We had the luxury of starting from scratch and building systems from the ground up. We focused heavily on tech and operational efficiencies, and that’s what allows us to accept clients at lower minimums.”
The investment is also tax-efficient as most South African investors can reduce the dividend withholding tax from 30% to 15% for US companies, which is not the case with many unit trusts – and CybiWealth handles the admin on its clients’ behalf.
Investors receive dividend notifications and news from the companies in which they hold a direct share investment. They can also log into their account online or via the app to view their account balance and shareholder activity.
CybiWealth charges an annual management fee of just 0.75% and there are no administration fees, initial fees, exit fees or performance fees. There is an additional 0.075% fee to Saxo Bank for organising safe custody of the investments.
“From a South African perspective, the JSE makes up less than 1% of the world’s total market cap, and we are facilitating diversification,” says Cooper. “In reality, there is a much larger world out there, and CybiWealth exists to provide access to it.”
CybiWealth is provided by FIM Capital Limited licensed by the Isle of Man Financial Service Authority and authorised and regulated by the Financial Conduct Authority. Distributed by Marriott Asset Management, a licensed Financial Services Provider.
Article written by Marcia Klein and originally featured on the Moneyweb website.