Building Hard Currency ETF Portfolios
By Gareth Stobie, ETFSA
Whilst exchange traded funds (ETFs) have become a popular way to invest on the JSE many investors have the desire to break free from the boundaries of the JSE and access a world of opportunity by investing in hard currency ETFs listed on international exchanges.
This means exposure to some of the most innovative, resilient, and dynamic international sectors, companies, and investment opportunities, many of which are not represented in the local market.
Why Global ETFs? Why Now?
The global ETF market has exploded in size and sophistication over the past decade.
Giants like Vanguard, iShares (BlackRock), and State Street Global Advisors offer thousands of ETFs covering every conceivable sector, region, and investment theme.
However, because these issuers are not active on the JSE, South African investors miss out—unless they go global.
But even those who may have already invested in hard currency, can find that their monies have been deployed into expensive or opaque fund investments.
ETFSA bridges this gap by offering personalised portfolio management that gives clients access to low-cost international ETFs in hard currency (typically USD, EUR, or GBP).
This not only provides diversification away from the Rand but opens the door to cutting-edge investment opportunities.
For starters, let us explore five compelling global themes where hard currency ETFs can play a powerful role in a well-diversified portfolio.
1) The Continued Dominance of U.S. Tech
As the widely considered epicentre of technological innovation, US tech giants continue to shape the global economy.
ETFs tracking the Nasdaq-100, artificial intelligence (AI)-focused companies, or FANG+ stocks (Facebook, Apple, Amazon, Netflix, Google, and others) offer concentrated exposure to this growth engine.
Example ETFs include: Global X Artificial Intelligence ETF (AIQ), SPDR S&P Kensho New Economies Composite ETF (KOMP), VanEck Semiconductor ETF (SMGB).
Why it matters: These ETFs provide access to companies driving the AI and 4th Industrial revolution, cloud computing, and digital transformation, all of which are trends that are likely to define the next decade.
2️) Markets Beyond the U.S.
While U.S. equities tend to dominate headlines, developed markets outside the U.S.—such as, Europe, Japan, and Australia—have recently shown strong performance, driven by economic resilience, undervaluation, and sector rotation.
Other markets such as Latin America are also great diversifiers and provide exposures to countries that are not always as easily accessible, such as Brazil.
Example ETFs include: iShares MSCI EAFE ETF (EFA), Xtrackers MSCI Europe Small Cap ETF (XXSC), and iShares Latin America 40 ETF (ILF)
Why it matters: These ETFs offer exposure to high-quality companies in stable economies, often with attractive dividend yields and lower valuations than their U.S. counterparts.
3) Niche Exposure: European Armaments and Defence
Geopolitical tensions and increased defence spending across Europe have created a unique investment opportunity in the aerospace and defence sector.
This is a niche that’s absent from South African markets but accessible through targeted ETFs.
From an ESG perspective, these ETFs focus on conventional defence by excluding companies that are involved in weapons banned by international law and controversial weapons are explicitly excluded.
Example ETFs include: iShares U.S. Aerospace & Defence ETF (ITA), WisdomTree Europe Defence ETF (WDEF), iShares Europe Defence ETF (DFEU), VanEck Defence UCITS ETF (DFNS).
Why it matters: These ETFs provide exposure to companies that are benefiting from the rising defence budgets, NATO commitments, and long-term government contracts.
4️) A Rebound in Global Real Estate
After a challenging few years, global real estate—particularly commercial and logistics-focused REITs—is showing signs of recovery.
With stabilising interest rates and a growing demand for warehousing, data centres, and residential housing, this sector offers income and growth potential.
Example ETFs include: iShares Core US REIT ETF (USRT), Vanguard Global ex-U.S. Real Estate ETF (VNQI), SPDR Dow Jones Global Real Estate ETF (RWO).
Why it matters: Real estate offers diversification, inflation protection, and attractive yields—particularly when accessed through global REIT ETFs.
5) Alternative Investments in Digital Form
Commodities, particularly gold, has long been considered an alternative safe-haven asset, offering diversification in a portfolio from a broad range of risks.
More recently investors have sought exposure to digital, or crypto assets as an alternative asset. Most noteworthy of these are cryptocurrencies such as Bitcoin and Ethereum, and since the introduction of these in ETF form, investors can now access such investments in a highly regulated and safe format, alongside the rest of their exchange-traded investment products.
Whilst investment professionals remain divided on the longer-term prospect for these sorts of assets their inclusion within traditional global exchanges has been welcomed by many.
Example ETFs include: iShares Bitcoin Trust ETF (IBIT), iShares Ethereum Trust ETF (ETHA), and Invesco Galaxy Ethereum ETF (QETH)
Why it matters: Digital assets have grown in stature and for investors seeking to house them in a safe environment, listed ETFs offer this option.
ETFSA: Your Partner in Global Investing
At ETFSA, we understand that navigating the global ETF landscape can be overwhelming, which is why we offer a personalised portfolio management service tailored to your investment goals, risk profile, and currency preferences.
Our clients benefit from:
- Access to thousands of ETFs across global markets
- Hard currency exposure to protect against rand volatility.
- Expert guidance on portfolio construction and rebalancing
- Transparent fees and a client-first approach
- Whether you are looking to tap into the next wave of tech innovation, diversify into developed markets, or explore niche themes like defence or real estate, ETFSA is your trusted partner.
Join our webinar, co-hosted with BusinessTech, on Thursday, 31 July at 11:00 AM, and discover how ETFSA can help you build a globally diversified, hard currency ETF portfolio.
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