When “home bias” becomes “home risk”
- Triplet 59
- 12 minutes ago
- 4 min read
Most investors start at home. It’s familiar: you understand the banks on your high street, the telco you use every day, the government securities your adviser talks about. In many African markets, those local instruments also offer attractive nominal yields.
But the last decade has shown how fragile that comfort can be:
Currency shocks can wipe out years of returns when measured in hard currency.
Inflation spikes can quietly erode the real value of cash, deposits and even some bonds.
Policy decisions—from sudden tax changes to capital controls—can hit local assets without warning.
A portfolio that is 90–100% exposed to one economy is effectively a high-conviction macro bet, whether the investor realises it or not. When things go well, the rewards can be strong. When they don’t, the downside can be brutal and highly correlated across every asset you own.
What global investments really add
Adding global investments alongside local ones doesn’t magically remove risk. It changes where and how you take it.
Currency diversification Holding part of a portfolio in hard currencies—USD, EUR, GBP and others—can offset the impact of a sharp local devaluation. When the home currency falls, the value of those global holdings rises in local terms, helping to smooth the overall journey.
Different economic cycles Local markets can be dominated by one or two sectors: banks and telcos, commodities, or government paper. Global portfolios can add technology, healthcare, global consumer brands, infrastructure, and more. Those sectors respond differently to recessions, elections, oil-price swings and droughts than a small domestic market does.
A wider inflation toolkit Inflation doesn’t behave the same way everywhere at once. Some economies tighten early; others lag. Access to global bonds, inflation-linked securities, real-asset funds and quality global equities gives investors more ways to respond than simply rolling local T-bills and hoping policy makers stay ahead of the curve.
The point is not to choose local or global. It is to build a structure where local + global work together: local assets capturing domestic growth and yield; global assets providing resilience, diversification and purchasing-power protection.
Turning concept into structure
For individual investors, the shift might start simply:
Keeping a meaningful slice of long-term savings in regulated, hard-currency investments rather than only in local cash and deposits.
Using global equity and bond funds to complement, not replace, local holdings.
Thinking in terms of real returns (after inflation and currency effects), not just the headline rate on a statement.
For institutions—banks, asset managers, pension funds, insurers—the challenge is more complex. They must:
Meet local regulatory and prudential requirements.
Manage liquidity in local currency.
Deliver competitive, risk-managed outcomes to members and clients.
In that context, global diversification is less about chasing exotic ideas and more about engineering stability: ensuring that when local markets are under pressure, there is something else in the portfolio pulling the other way.
How Verī Platform helps connect local and global
This is precisely where Verī Platform is designed to operate—quietly, in the background, behind regulated institutions rather than in front of retail investors.
On Verī, a bank, asset manager, pension fund or insurer can:
Combine local holdings—government bonds, local corporate paper, domestic equities—with regional and global investments in a single, regulated architecture.
Use multiple custodians (local and offshore) while maintaining one consolidated, look-through ledger for every client, every day.
Generate regulator-friendly reporting that shows supervisors exactly where currency, duration and issuer risks sit—whether that is in home-market instruments or global exposures.
In practice, that might mean:
A pension scheme keeping the bulk of its assets in local government and corporate bonds,
Adding carefully sized allocations to global equity, fixed income and real-asset strategies,
And viewing the whole structure through one platform that reconciles, values and reports consistently.
The result is not the elimination of risk—but the shift from unseen concentration risk to visible, intentional diversification.
Choosing which side of the image you want to live on
The world will continue to deliver shocks: elections that surprise, commodities that spike and crash, policy decisions that move markets overnight. No platform or portfolio can stop that.
What investors can choose is how exposed they want to be when the next shock arrives.
The world will continue to deliver shocks: elections that surprise, commodities that spike and crash, policy decisions that move markets overnight. No platform or portfolio can stop that.
What investors can choose is how exposed they want to be when the next shock arrives.
A portfolio tied entirely to one economy is like sitting on the fiery side of the picture, hoping the flames never quite reach you. A portfolio that blends local conviction with global diversification moves closer to the data-driven, cooler half: still exposed to markets, but far less likely to burn all at once.
That, ultimately, is the promise of using global investments alongside local ones as a hedge: not an escape from risk, but a better chance of staying in control when everything around you starts to heat up.
Is your pension doing the same?
#AfricanInvestors #GlobalInvesting #Diversification #InflationRisk #CurrencyRisk #WealthProtection #VeriPlatform
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