I have been working at Capital International Group for over a year now and admittedly, it’s been a fairly sharp learning curve. After initially being dropped in at the deep-end, I now know the offshore market in South Africa inside-out, so when I recently caught up with a friend over coffee and she asked why someone might consider offshore investing and how to invest offshore, I of course jumped at the chance to share my knowledge.
For many investors, moving money offshore can be daunting, but there is no denying that the potential benefits are compelling, especially for investors in countries where the economy is less stable.
So, in answer to the question of ‘why’ to invest offshore, simply put, it enables you to diversify globally and thereby spread your risk more broadly; be it through investing in non-domestic companies, accessing harder currencies, exporting your funds to a more politically or economically stable country or gaining a wider spread of asset classes. This diversification can bring huge benefits to South African investors and is a clear-cut reason to consider offshore investment opportunities.
Moving on to the ‘how’ to invest offshore, I recently read an article on offshore investing published by the Mail and Guardian. According to the author, one way to invest offshore is through a linked investment service provider, which is an independent administration company and offers investors access to collective investment schemes. Alternatively, there is also the option of using a local company which has an investment platform located in an offshore jurisdiction.
Another article published in April 2021 explored various routes to investing offshore. One method the author suggested was to gain exposure through local unit trusts. According to the article, these investment vehicles are allowed to invest up to 30% offshore and an additional 10% in other African countries.
Regardless of which route investors choose, important considerations when selecting an offshore provider would always be the breadth of the platform offering. For example, Is it open architecture? And does it provide access to a wide range of investments, including funds, investment structures or shares.
The performance of the platform’s technology is another consideration; think about speed, the reporting capabilities, as well as the overall user experience. Finally, when dealing with large sums of money, as an investor, you need to feel reassured and looked after. Be sure therefore to evaluate the quality of the platform’s customer service before making a final decision.
If someone asks me about investment providers, I am of course going to cheerlead for the Capital International Group. However, with the platform service the Group is able to offer, I feel my enthusiasm is fully justified.
Capital International Group’s product offering allows clients to choose between different routes to taking their assets or cash offshore and also assists in the tax liability issues which could potentially arise along the way. Because the platform is ‘execution-only’, the client has both flexibility and autonomy. Clients make the decisions on how and when to invest and Capital do all of the background work.
Finally, with headquarters in the Isle of Man as well as offices Johannesburg and Cape Town, the team have a strong understanding of the investment landscape in South Africa and are therefore well-positioned to understand and meet your financial requirements.
In an emerging financial market such as the South Africa, it is important for local investors to look at all options to grow their investments. And as I said to that friend of mine, you can stick to investing locally, but what then happens when the local markets are no longer serving your long-term financial plans?
To find out more about Capital International Group’s investment platform and other financial services, click here.
Disclaimer: The views, thoughts and opinions expressed within this article are those of the author, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security or to make a bank deposit.