Invest offshore
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, and are an important component of a well-diversified portfolio.
You get offshore exposure through our core range of local unit trusts which can invest up to a maximum of 45% offshore.
If you want more offshore exposure, we offer three options that may be suitable for you:
You can use rands to invest in rand-denominated offshore unit trusts offered by Allan Gray and other local managers. Although your investment is priced in rand, your investment performance will be determined by the performance of the underlying offshore assets and the daily currency movements. You don’t need to buy foreign currency or get tax clearance from the South African Revenue Service (SARS).
If you follow this route, you will use the investment manager’s offshore allowance and be subject to our standard local investment minimums.
You can invest in foreign currency offshore unit trusts (or funds) via our offshore investment platform. Our platform offers a small range of foreign currency funds, including those managed by our offshore investment partner, Orbis. Allan Gray can help you convert your rands to foreign currency if you choose this route.
With this option, you will use your own offshore allowance and be subject to our standard offshore investment minimums.
You can invest in foreign currency offshore unit trusts (or funds) via our offshore endowment. Our offshore endowment offers tax efficiency for investors with a marginal tax rate of higher than 30% and estate-planning benefits. You can choose from a small range of foreign currency funds, similar to those offered by our offshore investment platform. Allan Gray can help you convert your rands to foreign currency if you choose this route.
With this option, you will use your own offshore allowance and be subject to higher investment minimums.
The right option for you will depend on your personal needs and circumstances.
| Rand-denominated offshore unit trusts |
Allan Gray Offshore Investment Platform |
Allan Gray Offshore Endowment | |
| Domicile | South Africa | South Africa | Guernsey |
| Investment currency |
Rands | Fund currency | US dollars |
| Choice of unit trusts or funds | Rand-denominated offshore funds on the Local Investment Platform Fund List. | Funds on the Offshore Investment Platform Fund List. | Funds on the Offshore Endowment Fund List. |
| Access to your investment | You can access your money at any time. | You can access your money at any time. | Each plan consists of multiple underlying policies. During the first five years of your investment, known as the restriction period, you may only make one withdrawal per policy underlying the plan, and the amount you may withdraw is restricted. When you are not in a restriction period, you may withdraw from your investment at any time. |
| Minimum investment amount | A lump sum of at least R50 000 or a debit order of at least R1 000. | A lump sum of at least R50 000 or US$3 500 (or the equivalent in EUR, GBP, JPY or AUD). Debit orders are not allowed. | A lump sum of at least R400 000 or US$25 000 (or the equivalent in EUR or GBP). Debit orders are not allowed. |
| Maximum investment amount | There are no restrictions on the amount you can invest as you use the investment manager’s offshore allowance. The Allan Gray-Orbis rand-denominated offshore unit trusts are currently closed for basic unit trust investments. We have closed these unit trusts to prudently manage our offshore exposure within the offshore limit regulated by the South African Reserve Bank. You are still able to access the unit trusts via the Allan Gray Endowment, Living Annuity, Retirement Annuity Fund or Preservation funds. |
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. | 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. However, if you invest more than 120% of the higher of either of the previous two years’ total investments, your restriction period will be extended by five years (if your investment is already in a restriction period) or a new one will start. You have the option to start a new plan if you do not wish to extend the restriction period. |
| Capital gains tax (CGT) | A capital gain or loss calculated in rands will be triggered when you sell units, i.e. you pay CGT on all gains on withdrawal, regardless of whether the gain is as a result of capital growth or rand currency movement. The effective tax rate for an individual is between 0% and 18% (i.e. the capital gains inclusion rate is 40%, which is then taxed at your marginal tax rate according to the income tax table). |
A capital gain or loss calculated in fund currency and translated to rand at the spot rate will be triggered when you sell units, i.e. as an individual you pay CGT on withdrawal, but this does not include any gain realised as a result of rand currency movement while you are invested. The effective tax rate for an individual is between 0% and 18% (i.e. the capital gains inclusion rate is 40%, which is then taxed at your marginal tax rate according to the income tax table). |
A capital gain or loss calculated in US dollars will be triggered when you sell units, i.e. you pay CGT on all gains on withdrawal, regardless of whether the gain is as a result of capital growth or foreign currency movement against the US dollar. If there is a withdrawal, all accrued CGT up to the point of the withdrawal will be deducted as part of the withdrawal. If there is no withdrawal during the tax year, CGT on realised gains triggered by switches or the payment of fees will be deducted annually. Capital losses at year end will be carried forward. The effective tax rate for an individual is 12% (i.e. the capital gains inclusion rate is 40%, which is taxed at 30%). |
| Tax administration | You are responsible for tax reporting and payment. | You are responsible for tax reporting and payment. | Allan Gray Life Limited (Guernsey branch) takes care of the tax administration (calculation, collection and payment to SARS). |
| What happens on death? | The investment can be dealt with by a local or foreign executor according to your local or foreign will – if a valid letter of executorship or the equivalent is provided. | The investment can be dealt with by a local or foreign executor according to your local or foreign will – if a valid letter of executorship or the equivalent is provided. | You can appoint beneficiaries to receive the money or to take ownership of the investment if you pass away. If you appoint beneficiaries, there is no need for an executor and there are no executor fees. The beneficiaries will also not need to wait for the estate to be wound up to receive the benefit.* |
*Please refer to the Offshore Endowment Terms and Conditions for more detailed information.