Previously all investors in retirement products, such as Retirement Annuities, Preservation and Umbrella Funds, could only invest up to a maximum of 30% outside of Africa and an additional 10% in Africa, excluding South Africa. On 1 March 2022, SARB increased the percentage to 45%.
Regulation 28, issued under the Pension Fund Act, limits the extent to which retirement funds may invest in certain assets or asset classes. For example, a maximum of 75% in equities (local and offshore), and 25% in property (local and offshore). The allocation to offshore assets, although limited, has been increased to 45%. This is very good news for South African investors as we have greater access to the investable universe.
By investing offshore you gain exposure to global markets and diversify your investments. You will gain currency, geographical diversification and asset protection. Some argue that this represents significant progress towards SARB’s long term plans of relaxing exchange control regulations.
Unit trust companies can invest up to 45% of their retail assets under management offshore.
The offshore investment limits for local unit trusts, including those that comply with Regulation 28, are now increased to 45%. Over the long term, portfolio managers now have greater flexibility when it comes to making asset allocation calls. You may notice that some asset managers have taken advantage of the increase whilst others believe there is still greater value to be had on the JSE.
What does this mean for you, the individual investor?
If you have less than 45% allocated to offshore assets, we can increase your exposure to offshore depending on your risk profile and investment objective. We will discuss your current investment allocation and new changes proposed, during your next annual review. If you wish to discuss it sooner, please email us on info@quintuswealth.co.za.
Investing offshore, be it through retirement savings or directly requires guidance as there is foreign regulations, laws and taxes in each country. It is therefore important to get the right advice and assistance before embarking on the journey. At Quintus Wealth we believe in assisting our clients in giving them the right advice.