After the 2022 Budget Speech, the South African Reserve Bank (SARB) announced an exciting increase of the offshore investment limit for Retirement Funds. Funds are now allowed to invest up to 45% in offshore markets. Previously, the limit was 30% and a further 10% allocation for investment in Africa. The new limit has no such restrictions, and the entire 45% can be invested outside Africa.
Although funds and investors will probably only start noticing results over the long term, the change has been welcomed by most South African traders and retirement fund members. We expect the increase to improve diversification and versatility and open more global investment doors.
Here’s what it means for your investments
The relaxation of foreign exchange controls presents wonderful opportunities for all retirement product investors (Retirement Annuity, Preservation, and Umbrella Funds). Diversifying your portfolio across countries, industries, companies, asset classes, and currencies offers many benefits, including spreading risk and taking advantage of global growth opportunities.
When choosing where to invest, it is always good to consider where you’ll get the best value. The 45% offshore investment limit just means your portfolio manager has more and possibly better asset options to choose from. The increased limit also means more diversity and flexibility for your portfolio manager regarding asset allocation.
Other benefits of the increased offshore investment limit include:
-Protection against currency weakness and fluctuation, and
-A tax-efficient investment structure.
Keep making wise offshore investment decisions
We’ve mentioned some of the benefits of the revised offshore limit. While the increase is welcome, we encourage you to always stay true to your long-term investment or retirement goals, objectives, and investment capacity before taking on additional risk or making changes to your portfolio. Always speak to your financial adviser concerning any modifications you want to make to your portfolio.
As a member, client, or broker to one of mCubed Group’s Retirement Funds, we strive to provide you with the best investment administration and advice, excellent service, and complete transparency. Our fund-appointed FAIS accredited financial advisors are here to ensure you get to a beautiful, financially sound, and prosperous retirement.
For assistance regarding your investments, please feel free to contact us.