Tokkie Kasselman, Offshore Investment Specialist at Glacier by Sanlam

If you’re only investing in South African funds, you’re missing out on a world of opportunities. Global diversification offers a hedge against local uncertainty and rand volatility encouraging many South African investors to now look offshore. They do this not just for wealth preservation, but also for higher growth potential that could help fund major life goals, such as their children’s education or a first home.

You do not need to live overseas to access offshore investment benefits. “In the past, offshore investing had very high barriers to entry,” says Tokkie Kasselman, Offshore Investment Specialist at Glacier International. “Platform minimums were high, and structures were complex, only offering tax advantages for high-income taxpayers. This priced young investors and middle-income families out of the market.”

But that’s changed. Young South Africans are increasingly looking offshore for their investment exposure. “The world is bigger than South Africa,” says Kasselman. “And through offshore investments, people of all ages can now access sectors and stocks that South African funds and local stock exchanges can’t offer.”

Going offshore to achieve goals at home

If you’re investing toward a medium-term goal, like buying a new home or funding your children’s education, offshore funds are a compelling option. They offer diversification beyond the local economy, shield against rand volatility, and unlock global growth opportunities not found on the JSE.

“Another big consideration is inflation,” says Kasselman. “In developed markets like the United States or Europe, inflation is generally around 2% or 3% per annum, whereas in developing markets like South Africa, annual inflation has historically been as high as double that: around 5% or 6%. While this makes some investments (like bonds) more attractive, as a South African investor, you run the risk that your currency is losing its value far more quickly than someone whose wealth is in dollars or euros.”

Kasselman adds, “the rand, like most emerging market currencies, can be highly volatile and historically has weakened against major currencies. Holding assets offshore in stronger currencies helps preserve your wealth and purchasing power.”

“There’s also a tax advantage to investing offshore,” Kasselman points out. “Most offshore funds are accumulating funds, which means they don’t pay out dividends or interest to you directly. Instead, they reinvest their income back into the fund. This means that you don’t pay income tax or dividends tax; instead, when you sell units in the fund, you’ll pay capital gains tax, which is charged at a lower rate.”

A strategy for offshore risk

As with any investment, offshore investing carries some risk. Kasselman explains that this risk is reduced when you partner with an expert to help you navigate the market.

“Risk is always important for investors to consider, but it can’t and shouldn’t be avoided,” he says. “For example, if you had taken a risk-on approach for the past two years, you’d be happier than if you’d adopted a very conservative strategy. That’s the beauty and the beast of risk. The aim is to take careful, strategic risk.”

Glacier International, the offshore investment specialists of Glacier by Sanlam, gives South Africans access to direct international investments in multiple foreign currencies. Offshore portfolios are carefully constructed by expert fund managers.

“Every fund component is there for a reason,” says Kasselman. “Nobody’s taking any shots in the dark. The strategy for all our offshore funds is to hedge against inflation and currency volatility, and to manage macroeconomic risks. That’s so much better than simply picking your own funds and hoping for the best. Hope is good to have, but it’s not a strategy.”

Your guide in foreign territories

As a specialist business, Glacier International serves a range of investors, from sophisticated clients to those just starting in the investment world.

“We offer offshore investments from a minimum of R5 000 per month,” says Kasselman. “The amount is deducted in rands from your South African bank account, but your investment is in hard currency offshore funds.”

This creates a space for middle-income investors seeking solutions and strategies tailored to big life goals.

“Offshore investing used to carry a stigma that said it was only for the super wealthy,” Kasselman concludes. “For a long time, that was true. But it’s not the case anymore. If you’re interested in exploring the wider world of investments and growing your wealth overseas, there’s an offshore option for you.”

ENDS