Offshore investments
Offshore Investing for South Africans
Independent investment guidance for decisions that deserve a considered plan.
Offshore investing means placing part of your portfolio in assets outside South Africa, which may improve diversification by reducing reliance on any single economy. It also introduces its own currency, tax and administrative considerations, so it should be approached as a considered part of your overall strategy rather than a reaction to headlines.
Why South Africans consider offshore investments
Reasons investors look beyond local markets
Geographic diversification
Spreading exposure across more than one economy and market.
Currency exposure
Holding assets outside the rand as part of an overall strategy.
Access to global industries
Sectors and companies that are limited or unavailable on the JSE.
Reduced dependence on one economy
Lowering the impact of any single country's conditions on your total wealth.
Estate and long-term wealth planning
Offshore structures can form part of longer-term family and estate planning.
Ways to invest offshore
Several routes, each with different trade-offs
Rand-denominated offshore funds
Invest and withdraw in rand while gaining exposure to offshore assets.
Feeder funds
A local fund that channels money into an underlying offshore fund.
Global ETFs
Exchange-traded funds tracking international indices or sectors.
Direct offshore accounts
Holding foreign currency and investments directly in an offshore account.
International platforms
Investment platforms based outside South Africa offering a wider fund range.
Structured options where suitable
Certain structured products may suit specific goals, subject to careful assessment.
Direct versus indirect offshore investing
What changes depending on the route you choose
| Consideration | What to weigh up |
|---|---|
| Currency conversion | Direct investing requires converting rand to foreign currency; rand-denominated funds do this within the fund. |
| Allowances and compliance | Direct offshore transfers draw on your foreign-investment allowances and require compliance steps. |
| Administration | Direct offshore accounts generally involve more paperwork than a local rand-denominated fund. |
| Tax reporting | Foreign accounts may bring additional reporting obligations alongside standard SARS requirements. |
| Estate considerations | Assets held directly offshore may be subject to foreign estate rules in addition to South African ones. |
| Investment range | Direct and international platforms often provide access to a wider range of global funds and shares. |
| Minimums | Minimum investment amounts vary widely between rand-denominated funds and direct offshore platforms. |
| Fees | Currency conversion, platform and fund fees can differ meaningfully between routes. |
Exchange-control and tax considerations
What to check before moving money offshore
Current allowances
South Africans have annual foreign-investment allowances that apply to direct offshore transfers — current limits should be confirmed before transferring funds.
SARS reporting
Certain offshore transfers and holdings carry reporting obligations to SARS and the South African Reserve Bank.
Capital gains
Gains on offshore assets may be subject to South African capital gains tax for tax residents.
Foreign dividends and interest
These may be taxable in South Africa, subject to exemptions and any double-tax agreements.
Tax residency
Your tax residency status affects how offshore income and gains are treated.
Cross-border estate implications
Offshore assets may be subject to foreign estate or succession rules in addition to South African law.
Exchange-control allowances, tax rates and reporting requirements change from time to time. Please confirm current figures with your adviser or a tax professional before making a decision.
Currency risk explained
Rand movements can work both ways
When the rand weakens against foreign currencies, the rand value of offshore assets you hold generally rises, and when the rand strengthens, that same rand value can fall — even if the underlying offshore investment itself hasn't changed in its own currency. This means currency movements can add to returns in some periods and detract from them in others, which is a normal part of holding offshore exposure rather than a sign that something has gone wrong.
Offshore exposure isn't a bet on the rand falling — it's a way of not depending entirely on what happens to it.
Offshore allocation within a complete portfolio
Sized to your goals, not to fear or headlines
How much of a portfolio should sit offshore depends on your goals, time horizon, risk profile and how the rest of your assets are structured — not on recent currency movements, media headlines or how a particular market has performed lately. An allocation decided in response to short-term events can just as easily work against you as for you, which is why Mbalwa models offshore exposure as one part of your total portfolio rather than in isolation.
Expatriates and internationally connected families
Support for cross-border circumstances
Clients who have relocated, hold assets in more than one country, or have family connections abroad often face additional complexity around currency, tax residency and estate planning. Mbalwa can assist with the offshore-related aspects of financial planning that fall genuinely within our services, and will refer you to appropriate specialists — such as tax or cross-border legal advisers — where your circumstances call for it.
Risks and common mistakes
Pitfalls worth avoiding
Moving the entire portfolio offshore
Concentrating everything in one region removes the benefit of diversification.
Chasing recent performance
A market or fund that has recently done well won't necessarily continue to do so.
Currency speculation
Trying to time rand movements adds risk rather than reducing it.
Ignoring tax and estate implications
Overlooking these can create unexpected costs or complications later.
Overpaying in fees
Currency conversion and platform costs can erode returns if not reviewed.
Poor diversification
Offshore exposure concentrated in a single fund or region still carries concentration risk.
Using unregulated providers
Always confirm that a provider is properly licensed before investing.
How Mbalwa assists
Structured support for offshore decisions
Goal assessment
Clarifying why offshore exposure is being considered.
Offshore-allocation modelling
Working out a suitable proportion for your total portfolio.
Structure comparison
Weighing rand-denominated funds against direct offshore options.
Platform and fund review
Assessing suitable platforms and underlying funds.
Collaboration with tax professionals
Coordinating with specialists on tax and cross-border matters.
Ongoing monitoring
Reviewing offshore exposure as markets and circumstances change.
Frequently asked questions
Questions about offshore investing
You can invest offshore indirectly through rand-denominated offshore funds and feeder funds, or directly by moving funds abroad using your foreign-investment allowances and investing through an international platform. The suitable route depends on your goals, amount and complexity you're comfortable managing.
Not necessarily. Rand-denominated offshore funds give exposure to global markets while you invest and withdraw in rand, whereas direct offshore accounts typically require converting rand into foreign currency first.
It's a fund registered and priced in South Africa that invests in offshore assets, often through a feeder-fund structure into an underlying international fund. It offers offshore exposure without the administration of holding foreign currency directly.
Offshore investing carries its own risks, including currency movements, different market conditions and additional administration, alongside the diversification benefits it can offer. It should be sized and structured according to your overall goals and risk profile, not treated as automatically safer or riskier than local investing.
There's no universal percentage — the appropriate offshore allocation depends on your goals, time horizon, risk profile and the rest of your portfolio. A Mbalwa adviser can help model an allocation that reflects your circumstances rather than headlines or recent performance.
South African tax residents are generally taxed on worldwide income and gains, which can include foreign dividends, interest and capital gains from offshore investments, subject to applicable exemptions and any double-tax agreements. Your personal tax position should be confirmed with a tax professional.
Mbalwa can assist South African clients and, depending on circumstances, expatriates and internationally connected families with the offshore-related services genuinely offered — get in touch to discuss what's suitable for your situation.
Offshore investing typically involves fund or platform fees, currency-conversion costs and, where applicable, an adviser fee, all of which should be disclosed before you commit. These can vary depending on whether you invest through a rand-denominated fund or a direct offshore structure.
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