This, according to international specialist banking and asset management group, Investec.

“We live in unusual times in the markets,” said Brian McMillan of Investec Structured Products. 

"Having nursed itself back to health after the global financial crisis 10 years ago, the world economy faces new challenges, trade wars and a populist backlash against globalisation have created renewed uncertainty for investors.

“Meanwhile, low inflation and fears that trade wars could translate into a global recession have forced the world’s leading central banks to look to loosen monetary policy further, when they might have been expected to have unwound the stimulus programmes adopted after the financial crisis,” he said. 

The global financial crisis refers to the period of extreme stress in global financial markets and banking systems between mid-2007 and early 2009. The crisis was caused by deregulation in the financial industry. 

That permitted banks to engage in hedge fund trading with derivatives. Banks then demanded more mortgages to support the profitable sale of these derivatives, which then created the financial crisis that led to the Great Recession.

Investec says investors face a new phenomenon in negative interest rates. 

“In some developed economies, depositors are not just forgoing interest on their money, they are also having to pay their banks to keep their money,” McMillan said.

Those looking to invest offshore find themselves on the horns of a dilemma, McMillan said. 

“Invest in cash or bonds and earn a low or negative return? Or invest in global equities and take on the risk of a market correction? It’s the classic 'return on capital vs return of capital’ dilemma.”

He also said there were locally available investments, listed on the JSE, offering the investor exposure in US dollars or rands, to the S&P500 and Eurostoxx50 Indices, that were designed to address this need.

“Investors can choose the currency exposure and international index they prefer while also enjoying a high enhanced return relative to prevailing US dollar interest rates if the index rises or is flat on each of the annual call dates,” explained McMillan.

ANA