A reminder to investors looking to diversify their portfolios by maximising their offshore allowances afforded by the South African Reserve Bank (SARB):
These allowances will expire at the end of each calendar year on 31 December.
Under the Exchange Control Regulations, the SARB provides South African resident individuals with a R1 million Single Discretionary Allowance (SDA) annually, without requiring foreign tax clearance from SARS. The annual R1 million Single Discretionary Allowance applies to all South African residents over the age of 18 who hold a green bar-coded ID book or the new ID SmartCard.
Additionally, the 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 discretionary allowances, if necessary. It is important to note that your tax clearance is valid for a year from the date of approval, but allowances are valid for the calendar year.
Why is global diversification important in your investment portfolio?
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.
There are three methods to achieve global diversification:
- 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 Service (SARS).
At 27four, we live investments.
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.
Fund Fact Sheets can be viewed here:
On 30 October this year, 27four listed the 27four Global Multi-Factor Equity AMETF, which applies a sophisticated multi-factor strategy to select liquid offshore companies listed on developed global exchanges, focusing on the top 150-200 companies by market capitalisation, per the MSCI World Index. By investing primarily in financially sound shares, the portfolio aims to provide optimal returns with lower volatility, ensuring capital growth across diversified global sectors.
Coming soon…
27four will also be listing a 27four Global Shari’ah AMETF. This Shari’ah-compliant AMETF aims to achieve capital growth with a rea¬sonable level of income through investments in the global equity market. The portfolio focuses on securities listed on major global exchanges, ap¬proved by the Shari’ah Advisory Committee, ensuring that all investments adhere to ethical investing principles.
Let us guide you
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. For any inquiries or assistance, please consult your financial advisor or reach out to us. Our team is readily available to assist.