To place, or not to place money offshore?

PETER RIGBY: I think a very important thing - what you said earlier - is to have a diversified portfolio. People have been stuck in offshore portfolios - for two to three years now - not really knowing when to bring the money back because they would be turning a book loss into an actual loss. At the same time, it’s provided an opportunity for those who actually haven’t had money offshore to look at their portfolio and say with the rand at 5.60 it’s got to be a good time to actually be diversifying some of your money. As you say - especially after two very good years in the local market.

LINDSAY WILLIAMS: Nothing goes on forever - we know that. Let’s do a theoretical case study here - we’ve been long of the banks, we’ve been long of the diversified domestic industrials, we’ve been long on the retailers, we’ve made 50% profit - should we take that 50%, or less, or more, and put it overseas? If so, how should we do it?

PETER RIGBY: There’s a number of ways in which you can do it. The first way, the most simple way is by utilising our unit trust market - investing in global unit trusts. There’s a huge array of them, now - varying across equities, bonds, cash, property - that you can invest into. That, obviously, is a very simple way of doing it. You have one constraint, there, and that is capacity in many respects - some of the very good funds, you can’t get into, because the insurance companies are already at their limits. That leads onto a second option - every individual in South Africa, if you’re a taxpayer and resident here - you are able to use your R750,000 allowance. Utilising that allowance gives you a lot of flexibility - in taking that money offshore, putting it into an offshore banking account, and from there taking advice as to which offshore unit trusts, or mutual funds, to invest in.

LINDSAY WILLIAMS: Should we be looking locally, at one of the big institutions, to do the process you’ve just described, or is there any merit in going directly to an overseas company - sending the money out through the legal foreign exchange formality, and going to somebody who’s based in New York, or based in Sydney, or based in London - and dealing directly with the overseas entity?

PETER RIGBY: It is quite a small world - because of technology - and South African advisors like ourselves have actually got alliances with some of the bigger players offshore. What we are able to do - and most advisors who have got those alliances are able to do - is to facilitate an investor to move money offshore via the R750 000 allowance and invest in the likes of your Allan Grays offshore, or your Ashburtons, or your better known Citibank portfolios. That is available from South Africa - without having to create a relationship with somebody overseas. So we are able to get into the foreign portfolios - just the same as you would be able to if you were living in London.

Source: Business Day