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Allan Gray lowers offshore minimums

31 May 2018Earl van Zyl, Allan Gray

Allan Gray is reducing the barriers to entry for South African investors who want to invest offshore by significantly reducing the minimum amount required to invest via its offshore investment platform.

“It’s important for investors to maintain a well-diversified portfolio, which includes offshore exposure above what local South African funds are generally able to achieve. To better enable investors to do this, we have lowered the minimum lump sum investment for our offshore platform to US$1 500 from US$10 000 previously,” says Earl van Zyl, head of product development at Allan Gray.

Platforms offer unit trusts from a range of different investment managers – a one-stop service through which you can access any of these unit trusts in one investment account, while dealing with only one service provider such as Allan Gray. A locally-administered offshore investment platform suits investors who wish to invest directly in offshore funds but prefer to use a local business instead of opening accounts with several offshore managers in different jurisdictions.

Van Zyl notes: “Simplicity, choice, flexibility and cost efficiency are the key benefits of investing via Allan Gray’s offshore investment platform. We offer investors ease of administration and convenient service across a selection of offshore funds to reduce the hurdle of direct international investing. Our platform removes the anxiety and mystique surrounding the offshore investment process and our aim is to make it just as easy for long-term savers to invest with us internationally as it is locally.”

Through Allan Gray’s offshore investment platform, investors gain access to a carefully selected range of offshore-based unit trusts from well-established international investment managers, including seven of the Orbis international funds. This simplifies fund selection and makes it easier for investors to choose the unit trusts appropriate for their investment objectives.

“Investors have a single local point of contact to manage their account. It is simple to switch between funds on the platform and even process instructions for several funds concurrently. Investors can transact via our secure website, which also offers investment reporting that is easy to understand and helps to ensure that your investment is meeting your objectives,” adds Van Zyl.

Local offshore investment platforms also make it easier for investors to transfer cash or existing offshore investments to the platform without the need to repatriate them first. Withdrawals can also be made into an investor’s offshore bank account without any further SA exchange controls.

According to Allan Gray’s analysis, investors should hold between 30% and 50% of their total investment portfolio offshore. Yet most South Africans likely hold less than 30% exposure to offshore markets if their primary long-term savings are held in retirement products. This offers insufficient diversification, especially since the South African listed market comprises approximately 1% of the world’s total listed market value. Add to this the concentration of the local listed market (the 10 largest shares on the JSE account for 55% of the FTSE/JSE All Share Index, compared to just 11% for a global index such as the MSCI World Index), and the volatile rand, and it becomes clear why offshore diversification is core to a successful long-term investment plan.

“It is vital to invest offshore consistently, rather than trying to time the markets in response to dips in the rand and whatever bad news is making headlines at home. Trying to time your investments generally results in wealth erosion as investors tend to buy and sell at the wrong time.

Rather solicit the help of a reputable independent financial adviser to help decide how much of your portfolio should be invested offshore. Then work towards achieving and maintaining this goal using a disciplined strategy of long-term and consistent investing,” concludes Van Zyl.

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