Unlocking offshore investment opportunities

We have often reported on the importance of including international assets in long-term investment portfolios. Diversifying globally provides access to investment opportunities not available in the local market, helps to mitigate risk by making your portfolio more robust, and protects your future spending power from currency weakness, which is often the consequence of domestic economic disappointments and global events.

It is also important to know that you can access these benefits by investing your rands in a South African fund that invests all or part of its underlying assets internationally, or in an offshore fund if you already have cash in a foreign currency bank account. We offer the same range of international investment strategies in both onshore (rand-denominated) and offshore (foreign currency-denominated) funds.

Investing via an offshore fund diversifies jurisdiction risk and allows settlement in foreign currency, making it easier to fund future international liabilities, such as paying for education abroad, retiring in another country or funding cross-border generational wealth transfers. However, many investors have historically concluded that the additional costs, paperwork, and complexity of investing in an offshore fund means that it is not a viable option for them.

ACTUALLY, IT’S EASIER THAN YOU THINK

The good news is that it is becoming a lot easier for everyone to access offshore funds. This is especially true for offshore investments funded from existing foreign currency holdings or your annual single discretionary allowance of R1 million. This allowance is available to all South Africans over the age of 18 without any tax clearance requirements (i.e., minimal paperwork). Our offshore fund range is easy to understand and specifically tailored to meet key investor needs, simplifying the fund selection process for new investors. The Coronation Global Managed Fund, which represents our best investment view across global markets and asset classes, is well positioned to meet the needs of most long-term global investors.

We have made our offshore funds more accessible by reducing the minimum initial investment required to only $500 (or €500/£500). And, to reduce the red tape as much as possible, registered users of our secure online service will soon be able to open an offshore account with one click.

Domestic banks are also making it easier and more affordable to obtain foreign exchange and open a foreign currency bank account. Most banks now offer their existing clients easy access to a seamless online foreign currency account. The emergence of global money apps such as Standard Bank’s Shyft  is also making it easier to turn rands into foreign currency. These apps, with their low barriers to entry and easy accessibility to all, are increasing competition in the retail foreign exchange market. More competition means lower transaction fees and tighter spreads, reducing the cost of turning rands into dollars, euros, or pounds. Coronation will soon be a pre-loaded investment partner on the Shyft app, making this a very convenient and affordable way to fund your future foreign currency investments with us.

We are excited that the combination of lower initial investment requirements and the opportunities presented by more competition in the retail foreign exchange market are making the benefits of offshore investing available to many more South Africans.

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