Fund Managers may now allocate up to a total of 45% to offshore assets within regulated pension funds. The previous prudential limits of 30% offshore, along with a 10% African allowance, have been combined and increased into a single limit of 45% applicable to all qualifying investors. All retirement annuities, provident funds, and pension funds are governed by Regulation 28 of the Pension Funds Act, which, amongst other limits, stipulates the maximum amount that may be invested into offshore assets.
The proposed changes came into effect on 23 February 2022. This means that a maximum of 45% of assets can be invested outside of South Africa with immediate effect.
Optimum Positioning
The amendments are positively received by the Optimum Investment Group team. The changes now give portfolio managers more flexibility to move within the regulated pension fund arena, which in turn widens the investable universe and will allow managers to further diversify portfolios.
It is important to note that these amendments to Regulation 28 are limitation changes and does not force portfolio managers to invest into more offshore assets. The Optimum funds currently run at approximately 25% offshore (in these regulated pension funds). We currently see local assets as being attractive both in fixed income and equity markets. Optimum continues to seek opportunities abroad and will utilise the revised limit should the opportunity present itself.