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Global Diversification – Annual Offshore Allowances Reminder

Successful investors often emphasize the significance of diversifying portfolios across various asset classes, sectors, instruments, geographies, and currencies.

Diversification offers a shield for your portfolio during uncertain periods, allowing risk mitigation while capitalising on global opportunities.

Establishing a well-balanced, long-term strategy is crucial for wealth creation. Investing offshore provides South Africans exposure to burgeoning industries in developed and emerging markets, amplifying potential future returns.

The question arises, how can one integrate offshore exposure into their portfolio? Essentially, there are three methods to achieve this:

  • Opting for any of our Regulation 28 compliant funds grants access to the 45% foreign investment allowance available to fund managers.
  • Investing in a Rand-denominated international feeder fund allows a full investment (100%) into a fund feeding into a global fund, with the fund manager handling currency conversion via their asset swap facility, bypassing the need for SARS tax clearances by individuals.
  • Direct offshore investment through a chosen global fund, within limits imposed by The South African Reserve Bank (SARB) and South African Revenue Services (SARS).

Under the Exchange Control Regulations, The South African Reserve Bank (SARB) provides South African residents individuals with a R1 million Single Discretionary Allowance (SDA) annually, without requiring foreign tax clearance from SARS. Additionally, SARB also allows a further R10 million Foreign Capital Allowance (FCA) yearly, contingent upon a SARS foreign tax clearance valid for 12 months. An application to SARB for Special Approval can be made for additional discretions, if necessary. It’s crucial to note that these allowances expire on the 31st of December every year, emphasising the importance of utilising annual offshore allowances before year-end.

Our fund offering caters to diverse investment objectives. Our suite of diversified Regulation 28 funds is tailored for long-term wealth creation. For local investors seeking offshore exposure, we have the 27four Global Equity Fund of Funds and the 27four Global Equity Feeder Fund. Our consistent application of our investment principles aims to yield superior risk-adjusted performance over the long haul.

Investors often grapple with cognitive biases when making investment decisions. Hence, consulting your financial advisor before investing is essential to ensure appropriate portfolio diversification aligned with your investment goals.

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