Investing offshore allows you to spread your investment risk across different economies and regions. It also gives you access to industries and companies that may not be available locally.
Offshore investments may perform better at times than local investments, and vice versa, depending on various factors, such as global economic conditions and exchange rates.
Why go offshore?
1. You have control and flexibility
You can choose the investment option that suits your needs and access your money at any time.
2. You get one point of contact
You receive consolidated reporting for your foreign-currency investments.
3. You get help with the admin
We can assist you with the administrative requirements involved in taking your money offshore.
Is this for me?
Reasons investing offshore may not be suitable for you
- You need to use your own offshore allowance or money that is already offshore. If you have exceeded your personal foreign investment limit you may not be able to invest in foreign currency.
- You may need to obtain tax clearance and convert your rands into any of our accepted foreign currencies.
- Transactions can take significantly longer than local unit trusts.
- You cannot invest in foreign-currency investments via the Allan Gray Endowment, Living Annuity, Retirement Annuity or the preservation funds.
I have heard it is a good idea, should I invest offshore?
Depending on various factors such as global economic conditions and the exchange rate, at times offshore investments may perform better than local investments and vice versa. Having a portion of your investment offshore allows you to spread your investment risk because you have the potential to earn return under different conditions, as well as from a wider variety of industries and companies than is available locally.
- You get offshore exposure when you invest in any of the International funds.
- Up to 30% of these unit trusts may be invested offshore, with a further 10% allowed for African investments outside of South Africa, depending on where the investment manager finds value.
- If you want additional exposure, we offer rand-denominated and foreign currency offshore unit trusts.
ZAR vs Foreign currency
What are the differences between investing in rand-denominated and foreign currency offshore unit trusts?
|Invest in rand-denominated offshore unit trusts||Invest in foreign currency offshore unit trusts|
|Unit trust currency||ZAR – Rands||Foreign currency|
|Deposit currency||You invest using Rands||You invest using foreign currency or if you are a South African resident individual using your R1m annual allowance you can invest using Rands and Allan Gray will facilitate your currency conversion.|
|Withdrawal currency||Your payment will be made in Rands.||Your payment will be made in the foreign currency of the unit trust you are invested in.|
|Bank accounts||Withdrawals will be paid into your South African bank account only.||Withdrawals will be paid into your South African Bank account or your foreign bank account. These payments may incur bank charges and there are fees associated with converting currencies.|
|Offshore allowance||You make use of the relevant legal entity’s offshore allowance.||You make use of your own offshore allowance or money that is already offshore.|
|Minimum investment amount||You can start your investment with a lump sum of R20 000, or a R500 debit order. Additional contributions must be at least R500.||Your initial lump sum must be at least R20 000 or US$1 500 (or foreign currency equivalent). Additional contributions must be at least R5 000 or US$400 (or foreign currency equivalent). Debit orders are not accepted.|
|Maximum investment amount||There are no restrictions on the amount you can invest.||Investors are allowed to take R11 million offshore annually. If your money is already offshore there are no restrictions on the amount you can invest.|
|Exchange control approval||No foreign exchange approval is required.||For amounts greater than R1 million you require a Tax Clearance Certificate from the South African Revenue Services (SARS).|
|Tax||Foreign dividends are included in your taxable income and are taxed at an effective rate of 20%. The full value of foreign interest is included in your taxable income. The unit trust may also be subject to foreign withholding taxes on foreign income received. You pay capital gains tax on all gains on withdrawal, regardless of whether the gain is as a result of capital growth or currency movement.||Foreign dividends are included in your taxable income and are taxed at an effective rate of 20%. The full value of foreign interest is included in your taxable income. The unit trust may also be subject to foreign withholding taxes on foreign income received. You pay capital gains tax on withdrawal, but this does not include any gain realised as a result of currency movement while you are invested.|
Frequently asked questions about offshore investment unit trusts.
When I invest in the offshore-only investments, is my money actually offshore?
When you invest in one of the rand-denominated offshore unit trusts although your unit trust investment is in rands, your return comes from underlying offshore investments, such as shares, bonds, currency, whose performance depends on offshore markets rather than local markets.
The foreign currency unit trusts are based offshore and are managed by an offshore investment manager. Your investment is in foreign currency and your return comes from offshore investments. When you wish to make a withdrawal, we can transfer your investment to an offshore bank account registered in your name, without any further SA exchange controls.
Is my foreign currency investment safe?
As we are a South African company we can be impacted by changes to the South African laws, including the foreign exchange regime. You may take some comfort in the fact that although Courtney Capital is a locally registered company, your investment is in foreign assets and in foreign currency.
When you wish to make a withdrawal, we can transfer your investment to an offshore bank account registered in your name, without any further SA exchange controls.
Is my foreign currency investment considered local or offshore for estate planning purposes?
For estate planning, your foreign currency investment can be dealt with locally in the estate under a South African executorship. The investment will not be subject to the administrative complications of estates law in offshore jurisdictions or require the appointment of an offshore executor, as is the case with many offshore-domiciled investments. This simplifies matters considerably for the deceased’s South African executor.
What are the costs of investing offshore with Allan Gray?
The fees depend on how you invest offshore, and the investment options you select.
When you invest in any of Allan Gray, Coronation and Franklin Templeton’s rand-denominated offshore unit trusts, the administration and annual investment management fees are charged and deducted before the unit trust’s performance is published.
When you invest in foreign currency offshore unit trusts via the Allan Gray Offshore Investment Platform, we charge an annual administration fee based on the market value of all offshore platform investments linked to your investor number. We charge an annual administration fee (including VAT) of a maximum of 0.58% on the first US$400 000 (or foreign currency equivalent) invested and 0.23% on the balance over US$400 000 (or foreign currency equivalent). For investments in certain Allan Gray and Orbis unit trusts, we charge an annual administration fee (including VAT) of 0.35% on the first US$1.2m (or foreign currency equivalent) invested and 0.23% on the balance over US$1.2m (or foreign currency equivalent).
Where a portion of the investment management fee charged within the unit trust is passed on to us for the administration we perform, we reduce the fee we charge you. We only deduct the outstanding portion from your account. If the portion we receive for administration is larger than our administration fee, you will receive the excess as additional units in your account. When you invest in foreign currency offshore unit trusts, there may also be initial and/or exit fees, depending on the investment option you choose.