Allan Gray has announced that the Allan Gray Offshore Endowment, which is domiciled in Guernsey, is open for business.
“We have taken our time to gain a deep understanding of what clients need and are pleased to bring our offering to market,” says Julie Campbell, senior manager at Allan Gray.
She says the Allan Gray Offshore Endowment is an investment-linked long-term product, suitable for investors who want to diversify their portfolio across economies and regions outside South Africa, have a marginal tax rate of higher than 30% and require a product that offers tax efficiency and estate-planning benefits. It is for investors who have a time horizon of over five years. The investment minimum is US$25 000 or R400 000, with the plan being issued in US dollars, although a preferred currency can be chosen for reporting.
“Investing offshore in an endowment can be complex given its structure, beneficiary setup and offshore anti-money laundering requirements. However, we have worked hard to deliver a product that differentiates itself from others in the market,” says Campbell.
Guané Coetzer, offshore specialist at Allan Gray, adds that with a focus on preserving and growing generational wealth over time, the Allan Gray Offshore Endowment empowers investors to access global markets and structure their investments for continuity across generations.
Coetzer says that the effective capital gains tax (CGT) rate for an individual investing in an endowment is fixed at 12%, which means if the investor’s income tax rate is higher than 30%, capital gains will be taxed at a lower rate within the Allan Gray Offshore Endowment. Different tax rates apply to companies and trusts.
“Besides the tax efficiency, what makes it great from an estate-planning perspective, is that if the investor has appointed beneficiaries, there will be no executor fees on the value of the investment as the transfer or payment of proceeds to beneficiaries does not have to be facilitated by an executor. This ensures quicker payment of the proceeds, or seamless continuity of the investment, says Coetzer.
Another estate-planning benefit is that if the investor has appointed a life assured, the total value of the investment will be protected against creditors if certain conditions are met.
A key feature of Allan Gray’s product is that it has been structured with maximum flexibility in mind. “The Allan Gray Offshore Endowment is structured as a single plan made up of multiple underlying policies, which allows for more liquidity than when investing in a single policy. This gives investors flexibility and the potential to make more than one withdrawal, despite the restrictions imposed by legislation,” Coetzer notes.
Investors can choose from a select list of foreign currency funds domiciled offshore. In addition, contributions are possible in rands or foreign currency, including US dollars, British pounds and euros.
Campbell explains that the Allan Gray Offshore Endowment is competitively and transparently priced, with investments in the endowment aggregated with existing Allan Gray Offshore Investment Platform and Local Investment Platform investments for the calculation of administration fees. There is also no VAT on the administration fee.
“And of course, it wouldn’t be an Allan Gray product if it didn’t have a consistent client service experience,” says Campbell, adding that investors will have a local point of contact through the Allan Gray Client Service Centre, and new investment, additional contributions and switch instructions are captured online.
Investors may wish to consult an independent financial adviser, who can help them determine the appropriate level of offshore exposure to meet their long-term investment goals, and to help select offshore products and funds that are appropriate for their needs and circumstances.
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