HOW MUCH CAN A SOUTH AFRICAN ASSET FUND OR PORTFOLIO INVEST OFFSHORE?
According to Trading Economics, all Regulation 28-compliant portfolios and funds in any of the South African unit trust categories may invest offshore, but are only permitted to invest 25% of their assets in this way. Pushing the limits of this boundary becomes complex in an environment of extreme currency fluctuations, because funds that were already at or near this limit would be pushed beyond it if the rand falls. Both the Collective Investment Schemes Control Act (CISCA) and Regulation 28 state that when this happens for market movement reasons, investors have 12 months to get back in line. This is to ensure that managers don’t become forced sellers, which could potentially prejudice investors. There are also exchange control limits that apply to an asset manager’s entire retail unit trust book. They are allowed 30% of their assets under management to be held anywhere outside of SA, with an additional 5% allowance for investments in the rest of Africa.