INVESTING OFFSHORE WITH CORONATION - July 2017
There are different ways to gain offshore exposure with Coronation. Most of our flagship domestic multi-asset funds already have a considerable offshore allocation. We also offer a range of funds (rand-denominated or foreign-domiciled) that are invested in global markets. Below we discuss these options in more detail.
INVEST IN A REGULATION 28-COMPLIANT MULTI-ASSET FUND
Pension funds are currently allowed a maximum offshore allocation of 25% (with an additional 5% in other African markets). This level of exposure to offshore assets may be sufficient for investors who:
- only have the budget to save for their retirement and do not plan to make any other discretionary investments; or
- have both income and growth needs and/or a short investment horizon.
Our domestic multi-asset funds (Balanced Plus, Capital Plus and Balanced Defensive) are mandated to hold the maximum allowable offshore allocation on behalf of investors. Given that we continue to hold the view that global equity is the asset class with the highest return potential over the next several years, our current offshore positioning remains overweight (see Figure 6).
INVEST IN A WORLDWIDE FLEXIBLE MULTI-ASSET FUND
We offer two multi-asset funds optimised for discretionary investors not subject to retirement fund investment restrictions. Market Plus can invest up to 35% offshore, while Optimum Growth will typically invest between 50% and 90% of its portfolio in international assets. These funds are ideal for those investors who are comfortable with a larger exposure to offshore assets, but still require their fund manager to decide on the allocation between domestic and global assets.
INVEST OUTSIDE SOUTH AFRICA (IN A FUND THAT ONLY HOLDS GLOBAL ASSETS)
Investors who do not currently have access to the optimal level of offshore exposure by means of their pension funds, have investment horizons spanning multiple decades and/or large discretionary investments may consider further increasing their offshore exposure by investing in a rand- denominated or foreign-domiciled international fund:
INVEST IN A RAND-DENOMINATED INTERNATIONAL FUND
Investors can diversify their portfolios with exposure to other regions and currencies of the world by investing in any of our rand-denominated international funds. When investing in these funds, investors do not utilise any of their individual offshore allowances, but remain exposed to domestic sovereign risk. See Figure 7 on page 13.
INVEST IN A FOREIGN-DOMICILED INTERNATIONAL FUND
Investors can invest up to R1 million annually in an international fund without obtaining any prior approvals, and a further R10 million per annum after receiving tax clearance. By externalising your assets you diversify sovereign risk. See Figure 7 on page 13.
>> FIGURE 6: NEUTRAL VERSUS CURRENT OFFSHORE POSITIONING