Allan Gray’s rand-denominated offshore funds re-open

Both the Allan Gray-Orbis Global Equity Feeder Fund and the Allan Gray-Orbis Global Fund of Funds are once again open to new investments. These rand-denominated funds provide investors with easy and affordable access to the investment expertise of Orbis, Allan Gray’s global asset management partner, which is based in Bermuda and London.

The funds were closed temporarily in November last year due to the management company (Allan Gray Unit Trust Management Limited) having reached its maximum foreign investment limit according to foreign exchange control regulations. In terms of these regulations, ‘capacity’ for South African unit trusts to invest offshore is limited to 30% of the total domestic (South African) investments of retail investors in that unit trust scheme.

“Rand-denominated investments enable investors to benefit from offshore currency and investment exposure without using their offshore foreign allowance. They’re also far simpler than direct foreign investments, allowing investors to enter or exit a fund in their own currency without having to use foreign accounts,” says Johan de Lange, director of Allan Gray Unit Trust Management Limited.

The Allan Gray-Orbis Global Equity Feeder Fund invests directly into the Orbis Global Equity Fund. It recently won the Raging Bull Award for the Best Foreign (South African-domiciled) Equity Fund over three years to December 31, 2008. The fund pools investors’ monies to provide access to international equities. It has a minimum lump-sum investment of R25,000, or a monthly debit order of R500.

The Allan Gray-Orbis Global Fund of Funds invests in a mix of funds from Orbis, selected by Allan Gray. As an asset allocation fund, it gives investors access to a spread of international investments, some of which are not available locally, and, while it is required to hold at least 85% of its assets offshore, it aims to be fully invested abroad. Because of its spread of investments, the fund is designed to produce returns that are less volatile, albeit somewhat lower, than the returns generated by pure global equity funds. It also has an investment minimum of R25,000 in a lump-sum, or a monthly debit order of R500.

Offshore capacity in Allan Gray’s retirement annuity, and pension and provident preservation funds is still not available. This means that only unit trust investors, investors in the Allan Gray Living Annuity and investors in the Allan Gray Endowment may take advantage of this opportunity to diversify their portfolio internationally using a rand-based investment.