Financially Talking NewsletterMarch 2022

      National Treasury (NT) has increased the prudential limit on foreign exposures for institutional investors, retirement funds and investment funds. Previously foreign exposure for these investors could not exceed 30%, with an additional 10% African allowance. The prudential limits of 30% as well as the African allowance of 10% have been combined into a single limit of 45% applicable to all qualifying investors. This means that a maximum of 45% of assets can be invested outside of South Africa with immediate effect.

      WHAT IS THE POTENTIAL OPPORTUNITY FOR OUR INVESTMENT FUND MANAGERS?

      Our fund managers will see how the regulatory changes impact the strategic asset allocations of their funds. In the past some managers invested in Africa rarely utilised the full 10% as it was felt there was not enough investment opportunities. There could potentially be a higher strategic offshore exposure in the funds, but that isn’t finalised yet. It is important to note that offshore equities might not be the main beneficiary of this increased exposure. Our funds will remain Regulation 28 compliant despite potentially making use of NT’s new ruling.

      WHAT DOES THIS MEAN FOR YOUR CLIENTS?

      The implications are that clients can now invest up to 45% of their retirement investment portfolios offshore (up from 30% outside of Africa plus an additional 10% in Africa ex-SA previously). Since many international markets have outperformed the local market for years clients may want to increase their exposure – if it forms part of their strategy within a robust advice plan.

      WHICH INVESTMENT VEHICLES ARE AFFECTED?

      The following investment vehicles will now be able to accommodate these changes:

      • Old Mutual Wealth Retirement Annuity Investment
      • Old Mutual Wealth Preservation (Provident and Pension) Investment
      • Old Mutual Retirement Annuity Investment
      • Old Mutual Preservation (Provident and Pension) Investment

      WHEN WILL THE CHANGE BE EFFECTIVE ON THE SECURE PLANNER WEBSITE?

      Planners and clients will be able to amend their investment portfolios offshore exposure online by Friday 11 March 2022.