Frequently asked questions

No. When you invest in our unit trusts there are no ‘premiums’ and there is no commitment to a set investment period. It’s your investment - you decide how much, when and how you want to invest.

  • You can add lump sums to your investment at any time. When starting your investment with a lump sum the minimum is
    R20 000, but after that it’s just R500.
  • You can set up a debit order (minimum R500) at any time, which you can change, pause or cancel as your needs change.
  • You can do these transactions, at no extra cost, conveniently online, or you can complete and submit a form.

When you invest, you buy units in unit trusts of your choice. These units belong to you until you decide to sell them.

  • Your money is combined with that of other investors who have bought units in that unit trust.
  • Experienced investment managers use the pool of money to buy shares, property, bonds, cash or a combination of these, on local or foreign markets, depending on the type of unit trust.
  • How much your investment grows depends on the performance of these assets.
  • You can buy more units whenever you want to
  • You can leave your units to grow. 

We will send you a statement once a quarter showing how many units you have in your account, and what the rand value is. Alternatively, you can see this information when you log into your online account.

Watch a 49sec video explaining what a unit trust is

When you invest with Allan Gray, it’s your choice when and how much to invest and there are no consequences if you choose not to invest more. You own the units you have bought and your investment continues to earn return until you decide to sell your units. You can increase and decrease, pause and restart your monthly debit order whenever you want, or you can choose to add lump sums, of R500 or more, whenever you are able to. You can do these transactions conveniently online, or by completing and submitting the relevant forms.

Watch a 49sec video explaining what a unit trust is

 

Although we don’t offer specific options for each financial goal, you can use unit trusts to invest for various long-term or short-term objectives, including saving for your child’s education. A basic unit trust investment allows you to invest in a flexible way, where you decide how much and when to invest, and you can withdraw your money when you need to. Your choice of unit trust depends on how much you return you want to earn and whether you are comfortable with ups and downs, or whether you want stability.

Watch a 49sec video explaining what a unit trust is

Learn more about saving for your child's education

We offer unit trusts, which give you the opportunity to grow your money more than you would in a bank account. However, your investment value and return are not fixed and may go up or down.

You make the decisions and you have the flexibility to change your mind as you need to.

Many people are also familiar with investment policies that lock you into set premiums and investment periods.

When you invest with Allan Gray, you own your investment, there are no set investment amounts or periods. While a basic unit trust investment has no restrictions, if you invest via our retirement annuity, living annuity, endowment or preservation funds, there are some legal restrictions.

Watch a 49sec video explaining what a unit trust is

Learn more about investing by signing up to our 8 part ‘Investing 101’ series.

There are different aspects to investing. Some aspects are your responsibility and others you can do in partnership with an independent financial adviser and/or an investment manager. 

1. Deciding to invest

It is your responsibility to:

  • Make the decision to allocate part of your budget towards the future.
  • Stay invested for a reasonable length of time, and add to your investment when you can.

2. Developing a financial and investment plan to meet your goals

If your circumstances are straightforward, or you have the necessary skills and time, you can make these decisions yourself. However, a good independent financial adviser (IFA) can help you understand your financial needs and make the decisions best suited to you. IFAs take on the responsibility of developing a comprehensive long-term plan for you. 

Learn more about getting financial advice.

If you decide to use an IFA, you must pay for the advice and services you receive. Depending on what you and your adviser agree, we can facilitate your fee payments as deductions from your investment:

  • From your lump sum and debit orders (maximum 3%)
  • From your investment on an ongoing basis (maximum 1% ) 

Help me find an independent adviser.

3. Making investment decisions and delivering investment return

We do this within our unit trusts. When you invest in the Allan Gray Balanced, Equity or Stable Fund you don’t need to make any decisions (what to invest in, which markets offer better value, etc).

When you invest in unit trusts, investment management fees and administration fees apply. These vary between unit trusts and therefore depend on the unit trust you select. 

No. When you invest in our unit trusts there are no ‘premiums’ and there is no commitment to a set investment period. It’s your investment - you decide how much, when and how you want to invest.

  • You can add lump sums to your investment at any time. When starting your investment with a lump sum the minimum is R20 000, but after that it’s just R500.
  • You can set up a debit order (minimum R500) at any time, which you can change, pause or cancel as your needs change.
  • You can withdraw from your investment whenever you want to 
  • You can do these transactions, all at no extra cost, conveniently online or you can complete and submit a form.

Watch a 49sec video explaining what a unit trust is

A unit trust is a type of investment that provides easy and affordable access to financial markets. Your money is combined with the money of other investors and our investment managers use the pool of money to buy underlying investments, such as equities, bonds, cash and property, depending on the unit trust objective. The unit trust is split into equal portions called 'units' that are allocated to you according to the amount of money you invest and the price of the units on the day you buy them.

Unit trusts have a number of benefits:

  • You can benefit from our investment management expertise by investing R500 a month or more in our unit trusts.
  • You buy units in the unit trust of your choice, you decide when and how many units to buy and you own the units until you decide to sell them.

Watch a 30sec video explaining the key benefits of a unit trust

How much your investment grows depends on how much return your unit trust earns, which depends on the performance of the underlying investments that the investment manager chooses. You buy units in a unit trust.  You can buy more units whenever you want to, or you can leave your units to grow. You can see your investment balance online if you log into your online account, and we will send you a statement once a quarter.

You can make a withdrawal from your investment online, via your secure account, at any time. It takes three to five days for the money to reflect in your bank account.

The fees depend on the unit trust you select. When you invest in Allan Gray unit trusts our investment management and administration fees are charged within our unit trusts and deducted before we publish the unit trust’s performance. This means that no fees come off your initial investment, and no additional fees are deducted from your investment balance as you go along. The return you see is what you get.

Unit trusts are also often referred to as ‘funds’, or as ‘portfolios of collective investment schemes’. Legally, all unit trusts must have the word ‘Fund’ in the name, e.g. Allan Gray Balanced Fund. However, since the word ‘fund’ refers to different things, for example retirement fund, we prefer to use the term ‘unit trust’.

One of the main risks retirees face is outliving their retirement savings. Many of us will live for 30 years beyond retirement age, so we expect our retirement savings to ‘work’ for as long as we have worked.  With this in mind, the ideal time to start saving for your retirement is with your first pay cheque. A good rule of thumb to allow you to maintain your lifestyle later on is to save 17% of your salary starting at age 25. If you start later, you will naturally need to save more or consider retiring later.

If you need help putting together a retirement savings plan, you may wish to consider talking to an independent financial adviser. 

No. Although you legally can’t access your money in a retirement annuity until you’re at least 55, when you invest with us there are no ‘premiums’ or commitments for any set period. It’s your investment - you decide how much, when and how you want to invest.

  • You can add lump sums to your investment at any time. When starting your investment with a lump sum the minimum is R20 000, but after that it’s just R500.
  • You can set up a debit order (minimum R500) at any time, which you can change, pause or cancel as your needs change.
  • You can do these transactions, all at no extra cost, conveniently online or you can complete and submit a form.

 A unit trust is a type of investment that provides easy and affordable access to financial markets. Your money is combined with the money of other investors and our investment managers use the pool of money to buy underlying investments, such as equities, bonds, cash and property, depending on the unit trust objective. The unit trust is split into equal portions called 'units' that are allocated to you according to the amount of money you invest and the price of the units on the day you buy them.

Unit trusts have a number of benefits:

  • You can benefit from our investment management expertise by investing R500 a month or more in our unit trusts.
  • You buy units in the unit trust of your choice, you decide when and how many units to buy and you own the units until you decide to sell them.

Watch a 30sec video explaining the key benefits of a unit trust

Your retirement annuity investment continues until you decide to take your money out after the age of 55 to use it for a regular income. You must put at least two-thirds of your retirement annuity into another investment that will provide you with an income. At retirement, you can take up to one-third as a cash lump sum if you need to. 

To try to make sure you have enough money to support yourself later in life, the government has put rules in place in retirement annuities to protect your savings. If you can accept these restrictions you can benefit from tax savings.

You can withdraw your full investment if you have less than R7000, or if you emigrate. If you become permanently disabled, you can request early retirement.

 

  Retirement Annuity No retirement annuity (i.e. plain unit trust investment)  
Access to your money No Yes In a retirement annuity your money is safeguarded for your retirement, including protection from creditors. On the other hand, you will not have access to this money in an emergency.
Tax benefits Yes No A retirement annuity provides tax benefits in exchange for the restrictions.
Legal investment limits Yes No A retirement annuity limits your exposure to higher risk investments such as equities or offshore investments.
Access to your money at retirement 1/3 All Two-thirds of your money in a retirement annuity must be transferred to an investment that will provide you with an income in retirement.

Contributions to a retirement annuity are tax deductible (subject to certain limits). This means that you may be taxed on a lower taxable income amount and could receive money back from SARS at the end of the tax year. The income and capital growth earned on your investment until you retire is also tax free.

Example 1

You earn a salary of R300 000 in the 2017/2018 tax year, as well as a bonus of R100 000, and you invest R50 000 in a retirement annuity. From 1 March 2016, the maximum allowable deduction will be determined as the greater of:

  • 27.5% of taxable income, or
  • 27.5% of remuneration

Limited to R350 000 per year.

In this example, your taxable income is your remuneration (a total of R400 000). 27.5% of R400 000 is R110 000. This is less than the annual limit of R350 000, so your full contribution of R50 000 will be allowed as a deduction for the 2017/2018 tax year.

Example 2

You earn a salary of R900 000 in the 2017/2018 tax year, as well as commission of R400 000, and invest R370 000 in a retirement annuity. From 1 March 2016, the maximum allowable deduction will be determined as the greater of:

  • 27.5% of taxable income, or
  • 27.5% of remuneration

Limited to R350 000 per year.

In this example, your taxable income is your remuneration (a total of R1 300 000). 27.5% of R1 300 000 is R357 500 This is greater than the annual limit of R350 000. The difference between the actual contribution made (R370 000) and the maximum deduction allowed (R350 000), R20 000, will be carried over to the next tax year and will be seen as a ‘current’ contribution made in that year.

The fees depend on the unit trust you select. When you invest in Allan Gray unit trusts our investment management and administration fees are charged within our unit trusts and deducted before we publish the unit trust’s performance. This means that all the costs of investing in the retirement annuity are taken from these unit trust fees and no additional fees come off your initial investment, or from your investment balance as you go along. The return you see is what you get.

Unit trusts are also often referred to as ‘funds’, or as ‘portfolios of collective investment schemes’. Legally, all unit trusts must have the word ‘Fund’ in the name, e.g. Allan Gray Balanced Fund. However, since the word ‘fund’ refers to different things, for example retirement fund, we prefer to use the term ‘unit trust’.

Your retirement annuity does not form part of the value of your estate, which means that your money will not attract estate duty. A board of trustees is responsible for running the retirement annuity and protecting the interests of all members.  If you die while you are still invested in your retirement annuity, in terms of legislation, the trustees must thoroughly investigate your dependants and/or beneficiaries and allocate your money according to need. This process can take up to a year.

Learn more about the death claims process.

The Allan Gray Tax-Free Investment Account allows you to earn return from unit trusts of your choice without being taxed. 

It is your responsibility to make sure that you don’t go over the limits of R33 000 per tax year and R500 000 over your lifetime. These limits apply to the total of all your tax-free investments across different companies. Keep in mind that having more than one tax-free investment account makes it harder to keep track of your investments.

You can check your total contributions to your Allan Gray Tax-Free Investment per year, or since the start of your investment, whenever you need to via your secure online account. You could also consider keeping a record of your contributions so that you can check how much you have contributed before you make any additional investments. 

You will pay a penalty of 40% of any amount you invest above the maximum. For example, if you invest R35 000, which exceeds the annual limit by R2 000, you will need to pay R800 (40% of the R2 000 excess) to SARS at your tax assessment.

 Tax-free investment
Retirement annuity
 EndowmentUnit trust
Are Investments tax deductible?   No

Yes, up to certain maximums. 

No  No 
What are the annual investment limits? R33 000 (may be adjusted over time).  None None None
Are there lifetime investment limits? 

R500 000 (may be adjusted over time).

 No No No
What happens if I invest more than the limits? You will have to pay a penalty of 40% of the amount you invest above the maximum, across all your accounts. Not applicable  Your five-year restriction period will be extended If you invest more over one year than 120% of your investments over either of the past two years, into the same account. Not applicable
How much tax will I pay?  Tax free

Investment return is tax free.

Any money you take out at retirement may be taxed according to the retirement tax tables and your income in retirement will be taxed at your marginal rate at the time.

Taxed at 30%. Taxed at your marginal rate (for income and capital gains exceeding current tax-free thresholds).
Can I access my money? Yes. Please note that when you withdraw from your tax-free investment account you do not increase your annual or lifetime contribution limit. No withdrawals prior to retirement (except under specific circumstances) and limited access at retirement.  Yes, but with restrictions. Yes
Are there any investment restrictions? May only invest in unit trusts that charge a fixed fee. Must comply with the retirement fund investment limits. No No
Does the product offer estate planning benefits? You may nominate beneficiaries. If you do, although estate duty is payable, there are no executor’s fees.  You may nominate beneficiaries, although the trustees determine the allocation between your dependants and nominees. Not part of your estate. You may nominate beneficiaries. If you do, although estate duty is payable, there are no executor’s fees. Forms part of your estate.

In a basic unit trust investment (i.e. without a tax-free investment account), different types of tax may apply, depending on the underlying investments:

Dividend withholding tax (DWT)

  • 20% of any dividends is usually deducted within the unit trust directly from the dividend amount and immediately decreases the return the unit trust earns.
  • No DWT is deducted in a tax-free investment account.

Income and capital gains tax

  • Any interest income and capital gains must be declared to SARS and if they are above the tax thresholds (the first R23 800 of interest income and R40 000 of capital gains tax for people under 65) you will be liable for tax on your return calculated according to your marginal income tax rate.
  • The return you earn from your unit trust would be indirectly lowered through your increased tax liability.
  • Although there will be no immediate effect on your return, if you are already paying tax on your investment return (i.e. it is above the thresholds), you will benefit from income and capital gains tax savings in a tax-free investment account when you are assessed.

A retirement annuity (RA) is also tax free, and in addition, any investments you make into an RA are tax deductible, which means that they reduce your taxable income for the year. However, when you invest in an RA you cannot access your money until you leave the fund any time after you reach 55 years of age.

If you are taxed at more than 30%, an endowment offers tax savings, as the income tax rate in an endowment is fixed at 30%. However, there are restrictions on both your investments into an endowment and the withdrawals you may make.

You can do a partial or complete cash transfer out of your TFI account to another product provider from 1 March 2018.

The amount you transfer must be at least R50 000. After you transfer, you cannot continue contributing to a preservation fund.

This depends on your original fund and whether you have already taken any money from the retirement savings you are transferring to Allan Gray. If you transfer to a preservation fund and you have not already taken any money, you may be allowed a single withdrawal before you reach 55. Some funds impose restrictions on the amount you may take. You will be taxed on this withdrawal and this will affect your tax rate if you also take a cash amount at retirement. If you become permanently disable, due to an injury or illness, you can apply for early access to your money. You will need to provide medical evidence and your application will need to be approved by the fund’s board of trustees.

One of the benefits of a retirement annuity (RA) is that when you leave an employer you are not required to transfer your savings and you can continue investing in the same RA in your own capacity. However, you can transfer your existing RA to Allan Gray if you wish to. It is a good idea to check the terms and conditions of your existing RA to ensure that you understand any potential impact on your investment.

Learn more about the Allan Gray RA

Your options at retirement depend on the type of fund you have and the rules of your existing fund. Pension funds, and therefore also pension preservation funds, generally allow you to take up to one-third of your investment in cash, while the rest must be transferred to an investment product that will provide you with an income in retirement, such as a living annuity or a guaranteed life annuity.

Provident funds, and provident preservation funds, allow you to decide what to do with your money at retirement, including taking a cash amount or transferring to an income-providing investment product.

The fees depend on the unit trust you select. When you invest in Allan Gray unit trusts our investment management and administration fees are charged within our unit trusts and deducted before we publish the unit trust’s performance.  This means that all the costs of investing in the preservation funds are taken from these unit trust fees and no additional fees come off your initial investment, or from your investment balance as you go along. The return you see is what you get.

Your preservation fund does not form part of the value of your estate, which means that your money will not attract estate duty. A board of trustees is responsible for running the preservation fund and protecting the interests of all members.  If you die while you are still invested in your preservation fund, in terms of legislation, the trustees must thoroughly investigate your dependants and/or beneficiaries and allocate your money according to need. This process can take up to a year.

Learn more about the death claims process

You can transfer your savings in another preservation fund into the corresponding Allan Gray pension or provident preservation fund. This is known as a Section 14 transfer (in reference to the Pension Funds Act). These transfers can take some time. It's a good idea to check the terms and conditions of your preservation fund before you transfer, to make sure you understand any potential impact.

Learn more about transferring your preservation fund

If you have built up existing benefits from retirement savings as a member of a pension or provident fund and are planning a change of employment. You can also transfer your existing preservation fund at another company to Allan Gray.

You do not need to pay tax on the capital gains, interest or dividends the preservation fund earns. You will be taxed on any cash amount taken from the preservation fund.

No, you can’t use your preservation fund money to secure a loan.

Deciding on a product that has to provide you with an income for the rest of your life is one of the most important financial decisions you have to make. If you don’t feel equipped to make this decision unaided, you should consider talking to an independent financial adviser.

An alternative product to consider is a guaranteed life annuity. When making this decision, consider your personal needs, your risk appetite and the key differences between the products available:

  • In a living annuity, any investment return earned belongs to you and gives you the chance to increase your income over time. In a guaranteed annuity, your income is known in advance, and any additional investment return belongs to the product provider.
  • A guaranteed life annuity will provide you with a specified income for a set period of time (usually until you die), while your income from a living annuity, and how long it will last, will depend on the return you earn and how much you choose to withdraw. If you draw too high an income, you may run out of money.
  • The company that provides the guaranteed annuity carries all the investment risk. In a living annuity you take the risk that your investment will not perform as you expect, and that you may need to draw a lower income than you would like. 
  • Living annuities can be left to your beneficiaries when you die but guaranteed annuities cannot be passed on to beneficiaries.
  Living Annuity Guaranteed Life Annuity  
You choose your underlying investments Yes  No Your money in the Allan Gray Living Annuity is invested in your choice of unit trusts and you can earn return over time. In a guaranteed life annuity your money belongs to the product provider, who is required to pay you an income.
Your income is guaranteed No Yes A guaranteed life annuity will provide you with a certain amount of income until you die, whereas your income can fluctuate and fall in a living annuity. If your investment falls far enough, a living annuity will end before you die.
You can change your income level and frequency Yes No Once a year you can make adjustments in your living annuity. In a guaranteed life annuity you receive a set amount determined by the company providing it.
You can leave money to your beneficiaries Yes No In a guaranteed life annuity your retirement savings belong to the product provider – i.e. you use the full amount to buy the product. With a living annuity, any money that is left in your investment can go to your beneficiaries, or your estate, when you die.
You can convert your annuity into a different type of annuity Yes No You can convert your living annuity into a guaranteed life annuity, but you cannot convert your guaranteed life annuity into a living annuity.
You can transfer your annuity Yes No You can transfer your living annuity to another provider. Your guaranteed life annuity cannot be moved.

According to legislation you must draw between 2.5% and 17.5% of the value of your total investment per year. However, research has shown that your income has the best chance of lasting until you die if you withdraw a fixed rand amount (rather than a percentage) starting at 4% or less at retirement, and only increase the rand value of your income by inflation each year after that.

Read an article explaining our research into making your living annuity last

You can change your income level and the frequency of your payments on the anniversary of the date that your living annuity was started. It is important that you remember to make the change on this date – otherwise you will have to wait until the next year to make changes.

A living annuity is legally restricted to only accept transfers from retirement funds:

  • Preservation Funds
  • Pension and Provident Funds
  • Retirement Annuities
  • Other Living Annuities

You may not add any every day savings (such as debit orders, lump sums from your bank account or other investments) to your living annuity.

A living annuity is legally restricted to only accept retirement savings transfers. You cannot continue investing into your living annuity.

You can transfer from different retirement funds (i.e. preservation funds, pension funds, provident funds, retirement annuities) into one living annuity. You cannot combine living annuities, unless the anniversary date, income and frequency of the policies are exactly the same.

The fees depend on the unit trust you select. When you invest in Allan Gray unit trusts our investment management and administration fees are charged within our unit trusts and deducted before we publish the unit trust’s performance. This means that all the costs of investing in the Allan Gray Living Annuity are taken from these unit trust fees and no additional fees come off your initial investment, or from your investment balance as you go along. The return you see is what you get.

You can transfer an existing living annuity from another provider to Allan Gray, or from Allan Gray to another provider. This is called a Directive 135 transfer.

You can also transfer your living annuity to a guaranteed annuity. However, if you already have a guaranteed annuity, you cannot transfer it to a living annuity.

You cannot transfer your Allan Gray Living Annuity to a foreign provider. If you emigrate, your payments will continue to be paid into your South African bank account.

The return you earn in a living annuity is not taxed. However, your income is taxed at your marginal income tax rate, depending on the level of income you choose.

We will deduct the necessary tax from your income payment and pay this over to SARS on your behalf.

Depending on various factors such as global economic conditions and the exchange rate, at times offshore investments may perform better than local investments and vice versa. Having a portion of your investment offshore allows you to spread your investment risk because you have the potential to earn return under different conditions, as well as from a wider variety of industries and companies than is available locally.

  • You get offshore exposure when you invest in the Allan Gray Balanced, Equity or Stable Fund.
  • Up to 30% of these unit trusts may be invested offshore, with a further 10% allowed for African investments outside of South Africa, depending on where the investment manager finds value.
  • If you want additional offshore exposure, we offer in rand-based and foreign-currency investment options. 

Watch a 55sec video on investing offshore

Investing in rands is an easy and convenient way to invest offshore. Investing in foreign currency is a good idea if you have foreign currency to invest and/or you want your money paid out into a foreign bank account.

  Invest in rands Invest in foreign currency
Withdrawal currency  Your payment will be made in rands. Your payment will be made in the foreign currency you are invested in.
Bank accounts Withdrawals will be paid into your South African bank account only.  Withdrawals will be paid into your South African Bank account or your foreign bank account. There are bank costs associated with converting currencies
Offshore allowance You make use of the relevant legal entity's offshore allowance.  You make use of your own offshore allowance or money that is already offshore.
Minimum investment amount You can start your investment with a lump sum of R20 000, or a R500 debit order. Additional contributions must be at least R500.  Your initial lump sum must be at least US$1 500 (or foreign currency equivalent). Additional contributions must be at least US$400 (or foreign currency equivalent). Debit orders are not accepted. 
Maximum investment amount There are no restrictions on the amount you can invest. Investors are allowed to take R11 million offshore. If your money is already offshore there are no restrictions on the amount you can invest.
Exchange control No foreign exchange or tax clearance is required. You will need to exchange rands into foreign currency. For amounts greater than R1 million you require a tax clearance from the South African Revenue Services (SARS) and South African Reserve Bank (SARB) approval.
Tax  Dividend and interest withholding tax are deducted within the unit trust and you pay capital gains tax on withdrawal.  No dividend or interest withholding tax are deducted. You pay capital gains tax on withdrawal. 

Allan Gray is based and regulated in South Africa and your investment account is in South Africa.

When you invest in one of the rand-based offshore unit trusts you get offshore exposure. This means that although your unit trust investment is in rands, your return comes from underlying offshore investments, such as shares, bonds, currency, whose performance depends on offshore markets rather than local markets.

The foreign-currency investments are based offshore and are managed by an investment manager abroad. Your investment is in foreign currency and your return comes from offshore investments. When you wish to make a withdrawal, we can transfer your investment to an offshore bank account registered in your name, without any further SA exchange controls.

As we are a South African company we can be impacted by changes to the South African laws, including the foreign exchange regime. You may take some comfort in the fact that although Allan Gray is a locally registered company, your investment is in foreign assets and in foreign currency. When you wish to make a withdrawal, we can transfer your investment to an offshore bank account registered in your name, without any further SA exchange controls.

Yes, you can contact us to invest directly with Orbis. However, the minimums are higher than investing via the Allan Gray offshore investment platform.

For estate planning, your foreign-currency investment can be dealt with locally in the estate under a South African executorship. The investment will not be subject to the administrative complications of estates law in offshore jurisdictions or require the appointment of an offshore executor, as is the case with many offshore-domiciled investments. This simplifies matters considerably for the deceased's South African executor.

The fees depend on how you invest offshore and the investment options you select.

When you invest in any of our unit trusts (excluding Allan Gray Africa and Allan Gray Australia funds), the administration and annual investment management fees are charged and deducted before the unit trust’s performance is published. For Allan Gray Africa and Australia funds, we may deduct additional administration fees from your account, after the unit trust’s performance is published.

When you invest using foreign currency, there may be initial and/or exit investment management fees, depending on the investment option you choose.

You can also invest with other investment managers through Allan Gray. 

We charge an annual administration fee (including VAT) of a maximum of 0.58% on the first US$400 000 (or foreign currency equivalent) invested and 0.23% on the balance over US$400 000 (or foreign currency equivalent). The fee is calculated on the market value of all offshore platform investments linked to your investor number.

Where a portion of the investment management fee charged within the unit trust is passed on to us for the administration we perform, we reduce the fee we charge you. We only deduct the outstanding portion from your account. If the portion we receive for administration is larger than our administration fee, you will receive the excess as additional units in your account. 

Learn more about the annual administration fee structure when investing with foreign currency 

Your decision should depend on how much return you want to earn and whether you are comfortable with ups and downs or prefer stability.

Thinking about how long you have to invest for, and how quickly you might need to access your money can help you weigh the return you want against the stability you need.

Learn more about striking a balance between risk and return, which is an important part of choosing a unit trust.

If you are not comfortable making your own investment decisions, you may wish to speak to a good, independent financial adviser.

It’s best to make sure you’re comfortable with your choice up front so that you can get the most out of the unit trust you’ve chosen and not make changes unnecessarily. But you can change to a different unit trust, at no cost, whenever you feel your circumstances or needs have changed.  This transaction is called a ‘switch’.

It’s a good idea to review your investment once a year. But, if you’re comfortable that you made the right choice up front, you only really need to consider changing your unit trust when your circumstances (specifically, the time period before you need to access your money) change.

Learn more about your reviewing your investment.

For any investments in the Allan Gray unit trusts both investment management and administration fees are deducted within our unit trusts. You do not pay any additional administration fees for investing via the platform.

For all other unit trusts, we charge an annual administration fee (including VAT) of a maximum of 0.58% on the first R1.5m invested, 0.23% on the next R3.5m and 0.12% on the balance over R5m. The fee is calculated on the market value of all local platform investments linked to your investor number.

Where a portion of the investment management fee charged within the unit trust is passed on to us for the administration we perform, we reduce the fee we charge you. We deduct only any outstanding portion from your account.

If the portion we receive for administration is larger than our administration fee, you will receive the excess as additional units in your account.

Learn more about how the annual administration fee structure works 

The selection of unit trusts available on the platform is demand-driven and reviewed annually. We establish demand by surveying the independent financial advisers who work with us. We have also engaged the services of an independent ratings company to rate the unit trusts we offer.

We only offer unit trusts that have been registered by the Financial Services Board and we require unit trusts to be of a minimum size for liquidity purposes. We aim to offer more choice where there is more potential for differences in performance. This means we offer more equity unit trusts than asset allocation/fixed income unit trusts, and at the same time we ensure we do not have too much duplication but rather a spread across the asset classes.

Rand-based offshore unit trusts are available, which you can include with local unit trusts in the same portfolio. We also have a wide range of foreign currency unit trusts available on the platform. You will need to complete a separate application to invest in these, and they will be held in a separate account.

Learn more about investing offshore

To make space for new unit trusts, we ‘cap’ unit trusts that are not taking flows over at least a one or two-year period. Capping means we keep the unit trusts open for existing investors, but they won’t be available for new investors. We may ask investors to switch out of a unit trust if we decide to close it, but only if very few investors remain in the unit trust – and we always give investors three months’ notice of our intention to do so.

  Allan Gray Management Company Allan Gray Investment Platform
Unit trust available  Allan Gray unit trusts only. Allan Gray unit trusts and a selection of unit trusts from other investment managers.
Unit price The unit price that applies to your transaction is the price allocated on the day you invest.  The unit price that applies to your transaction is one business day delayed. It is allocated one business day after you submit your investment.
Administration fees Administration fees are deducted within our unit trusts along with our investment management fees. No fees are deducted from your investment. 

Administration fees are deducted within our unit trusts along with our investment management fees. No fees are deducted from your investment and there is no additional fees for investing via the platform.

For all other unit trusts, we charge an annual administration fee (maximum 0.58% incl. VAT). However, if the manager passes on a portion of the fee deducted within the unit trust to us, we reduce the administration fee we charge you. 

Distributions Distributions can either be reinvested or paid directly into your bank account.  Distributions are reinvested. 

Unlike many other endowments, when you invest into the Allan Gray endowment you invest into your choice of unit trusts.

  • You decide how much and when to invest.
  • You can make changes to your investment at any time and we do not charge any fees or penalties.
  • Your investment return depends on the unit trust performance. You are responsible for making sure your unit trust choice suits your needs.

Although there is a legal restriction period during which you have limited access to your money, when you do make a withdrawal, we do not charge any fees or penalties.

It is important to understand that you are only allowed one withdrawal during the restriction period and you cannot take a loan out against your investment.

The Allan Gray endowment does not include any insurance cover.

  Endowment No endowment (i.e. plain unit trust investment) 
Access to your money   Yes, but with restrictions.  Yes You can access your money when you are out of the restriction period. Within the restriction period you are legally allowed only one withdrawal.
Tax benefits   Yes, for certain individuals.  No Tax benefits only apply for individuals whose income tax rate is above 30%. 
Investment limits   No, but with conditions.  No Be aware that you may trigger an additional restriction period if you break the 120% rule.
Estate planning   Yes  No You can nominate beneficiaries to immediately receive the money or to take ownership of the investment if you pass away. In a plain unit trust investment, your money will be paid into your estate. 

You can start your investment with either a R500 monthly contribution or a R20 000 lump sum. You can make an additional contribution, of at least R500, at any time. Keep in mind the 120% rule when making contributions, as breaching this can result in additional restriction periods.

The fees depend on the unit trust you select. When you invest in Allan Gray unit trusts our investment management and administration fees are charged within our unit trusts and deducted before we publish the unit trust’s performance. This means that all the costs of investing in the Allan Gray Endowment are taken from these unit trust fees and no additional fees come off your initial investment, or from your investment balance as you go along. The return you see is what you get.

You may only withdraw money once during a restriction period. If your initial restriction period is extended because you invested more than legally allowed in terms of the 120% rule, you may only make one withdrawal during the entire extended restriction period. When you are not in a restriction period, you may withdraw any amount, at any time. You may also set up a regular monthly withdrawal.

In the Allan Gray Endowment, the tax due is deducted when you withdraw from your investment.

No, our endowment does not include any insurance cover.

You may not take money out of your endowment as a loan against the investment. However, you can use your investment as security for a loan from another financial institution by ceding your investment, or part of it, to that institution.

As the person investing in the Allan Gray Endowment, you will be known as the policyholder, or the owner of the investment. You can then make various nominations depending on your estate planning needs.

You can choose to appoint no life assured, one life assured or multiple lives assured. You can be the life assured, or you can nominate other people.

If you have chosen to nominate one or more lives assured, the endowment will come to an end when the last life assured dies. Your money will be paid out directly i.e. the beneficiaries do not need to wait for the estate to be wound up. You can also nominate a beneficiary for ownership to inherit the investment and become the new policyholder if you die.

If no life assured is nominated, ownership of your policy will transfer to your beneficiary for ownership when you pass away. If there is no beneficiary for ownership, your money will be paid out directly to your beneficiary for proceeds.

No executor's fees will be charged on the amount paid out, but it will form part of the estate for the calculation of estate duty.

Each employee individually applies to become a member of the Allan Gray Retirement Annuity. Every month, the employer deducts the agreed monthly contribution from each employee’s salary and pays this over to Allan Gray on the employee’s behalf. As individual members of the Allan Gray Retirement Annuity, the employees make their own unit trust selection, and receive quarterly statements from Allan Gray.

A minimum of five employees is required to make use of the group retirement annuity system. 

Allan Gray will act on the instructions and payments received from employers. Employers deduct employees’ contributions from their salaries and pay these via EFT (electronic fund transfer) to the Allan Gray Retirement Annuity bank account on a monthly basis. To help employees monitor and reconcile the contributions made on their behalf, and to check that these contributions have been invested into their selected unit trusts, Allan Gray will send quarterly statements to each employee. Employees can also monitor and manage their investments by registering for a secure online account. Employees may change their contribution levels with their employer.

Yes, but Allan Gray cannot enforce this contractual obligation.

If an employee resigns, they may continue to be a member of the Allan Gray Retirement Annuity in their own right.  They can continue investing via a debit order, stop contributing without penalties and start contributing again any time.

We believe independent financial advice plays an important role in helping:

  • You to decide on the most appropriate retirement funding product for your staff, and
  • Your employees to make the best investment decisions for their circumstances.

Allan Gray is not authorised to and is not able to provide advice or any guidance on whether the Allan Gray Group Retirement Annuity is the most appropriate option for an employer or for individual employees. It is the role of the individual employees to select their unit trusts. Allan Gray respects the right of all employees to choose whether or not they need advice, who they receive advice from and what fee is negotiated between themselves and their advisers.

 

  Group retirement annuity Traditional pension or provident fund
Choice and control

Employees pick underlying unit trusts to suit their needs and personal circumstances. 

Employees often have limited control over their investment.

Leaving an employer

Employees can continue to contribute to their retirement annuity in their personal capacity.

Employees cannot `cash in´ any benefit if they leave their employer.

Members may be allowed a partial or full withdrawal, but this will be subject to tax. When members leave their employer their membership of the fund ends.

Transfers Employees can transfer any benefits under the Allan Gray Retirement Annuity to another approved retirement annuity of their choice at any time without penalty. Some funds may charge penalties if members leave before they retire.
Withdrawals

Employees may only withdraw from the retirement annuity in the following circumstances:

  • The total investment value of all retirement annuity investment accounts is less than/equal to R7000 and they are not contributing to their retirement annuity anymore
  • If they emigrate from South Africa and their emigration has been approved and recognised by the South African Revenue Services and the South African Reserve Bank
  • They become permanently disabled
Depending on the fund rules, members may be allowed to make a withdrawal.
Retirement age 55 55, but depends on the employer.
Insurance There are no insured death or disability benefits. Any risk protection or additional benefits must be sourced separately. Life and disability insurance are often part of the package. 
Benefit at retirement Employees are only legally allowed to take out up to one-third of their investment as cash. The rest must be transferred to an investment that will provide a retirement income.

Employer funds sometimes pay members their retirement benefits from the fund, without the member needing to transfer to another investment. 

Some employer funds give employees a specified retirement benefit – or pension – when they retire. In other funds, the benefit is not guaranteed and depends on how much is contributed and how well the investment performs.
Emigrating or accessing funds  as a foreign national           

Funds can only be  accessed if the emigration is recognised by SARS.

Foreign nationals  cannot access their funds until age 55 and will have to purchase a living annuity in SA, unless they go through a formal emigration process recognised by SARS.

Employees can make a full withdrawal of their funds when they emigrate.

Foreign nationals can make a full withdrawal of their funds.

The optimal way to approach planning for education costs is to invest as much as you can for the later schooling years (high school and tertiary education), giving your investment time to grow. With more time to invest, you can choose a longer-term investment option that is likely to deliver higher return over time.

But investing helps in the shorter term too. You can ease the pressure on your salary during your child’s pre- and primary school years by investing in a more stable short-term investment for the following year, or the next few years.

Read Investing for education to learn more.

According to our research, investing R3500 from the birth of your child makes it likely that you would be able to pay all fees from your investment and the financial impact on you would be 29% lower than paying from your salary.

However, since education costs are extremely variable and depend on your personal priorities and circumstances, there is no set amount you need to save up, and therefore no set amount you need to contribute.

With education, the point of investing isn’t to meet a goal but to relieve this burden on your income. This means that instead of trying to find out exactly how much you should be saving, you just need to allocate as much of your budget as you can, as soon as you can.

Read Investing for education to learn more.

When you invest in a unit trust you buy units. You can see how many units you own at any time via your secure online account or on your statements. You decide how many units to buy and you can buy more and sell them as you choose to. There are no set premiums and no penalties for making changes, stopping your debit order or withdrawing from your investment. In a basic unit trust investment there are also no withdrawal restriction periods. On the other hand, education policies may have specified premiums and set investment periods that may not be flexible.

These products also often have additional features such as built-in life insurance and guaranteed payments. While these features may be convenient, they add additional costs that reduce the amount available for investment. With a unit trust investment, the focus is on delivering investment return. You should think about your risk protection separately as part of your insurance cover. This is likely to be more cost effective. In terms of guaranteed return, the benefit of the guarantee often doesn’t justify the costs and when you are investing for the long term, if you can wait out the ups and downs you can benefit from higher return over time. If you are not able to wait, there are shorter-term options that offer higher stability, without the need to pay for a guarantee.

Sometimes things don't go as planned. If you decide not to use the money in your investment to pay school fees, you can use it to finance a gap year, fund a business venture or for anything you choose to. With no restrictions on usage, a unit trust investment gives you more control than many specialised education products.

The money in a basic unit trust investment will go into your estate if you die. It will then be allocated to your beneficiaries in terms of your Will.

Unlike many specialised education policies, a basic unit trust investment does not come with life insurance. It is a good idea, and generally cost effective, to make provision for your dependants in your overall life cover.

How much your investment grows depends on how much return your unit trust earns, which depends on the performance of the underlying investments that the investment manager chooses. You buy units in a unit trust.  You can buy more units whenever you want to, or you can just leave your units to grow. You can see your investment balance if you log into your secure online account, and we will send you a statement once a quarter.

We have a simple range of four unit trusts to choose from. You can save some money in a short-term option for fees in the near future, to relieve the pressure on your salary, and some into a longer-term option aiming to grow your investment so that it covers the costs of those schooling years.

We have two options suitable for the short term:

  • The Allan Gray Money Market Fund is suitable for investing for about one year. This means it can be used to save money in one year to pay fees in the next. It aims to deliver higher return than bank accounts.
  • The Allan Gray Stable Fund aims to beat inflation and is a good option for investing for two to three years. There may be some fluctuation within a two-year period.

We also have two longer-term options:

  • The Allan Gray Balanced Fund is our flagship unit trust for long-term growth. It is suitable for investing for three or more years.
  • The Allan Gray Equity Fund offers the highest potential return but is only suitable if you know you won’t need access to the money you invest in it for at least five years, and you are comfortable with significant fluctuation that may last for a few years.

Many people choose the Balanced Fund to grow their money over time, while also saving some money in the Stable Fund for use in the shorter term. Your choice depends on your needs and what level of fluctuation you are comfortable with.

A basic unit trust investment is a simple, straightforward way to save for your child’s education, as well as any other goal. In addition to a basic investment, the other Allan Gray options you could consider are a Tax-Free Investment (TFI) or an Endowment. Both of these options give you tax benefits, but come with some restrictions.

  • TFI: There is no tax on your return, but there are limits on the amount you can invest. You cannot replace what you withdraw, so a TFI makes most sense if you are not going to access the money for a very long time.

Learn more about the Allan Gray TFI

  • Endowment: Investment return in an endowment is taxed at a fixed rate of 30%, which means that you can save if you are usually taxed at a higher rate. There is a minimum five-year restriction period where you have limited access to your money, making it specifically suitable for long-term investing. There are also investment rules which, if breached could result in further restriction periods.

Learn more about the Allan Gray Endowment

If the investment is in your own name, it belongs to you for its duration and any income and growth on the investment must be included in your tax return.

When you invest in your child’s name, the investment is in your control until your child turns 18. If you are investing your own money on your child’s behalf, i.e. as a ‘donation’ to your child, the income and growth will also need to be included in your return.

Your child takes control of the investment at 18, and is then liable for tax on it. Since you will most likely be in a higher tax bracket than your child at that stage, there may be a tax benefit to this option. Keep in mind, however, that there is a limit to the amount you can invest on behalf of a child tax-free. When you go over this limit donations tax may apply.

Umbrella funds provide cost savings as they are able to offer lower administration costs than standalone funds, due to economies of scale from costs being spread across all participating employers. In addition, the umbrella fund appoints a board of trustees, which undertakes administrative, governance and compliance duties for the fund on behalf of all participating employers. Individual employers who set up standalone retirement funds have to absorb all these costs themselves.

The employer joins the Fund and provides Allan Gray with their employees’ details, including the contribution amounts to be deducted from employees’ salaries each month. These contributions are paid to Allan Gray by the employer on their employees’ behalf.

Once the first contribution is made, each employee becomes a member of the Fund and an Allan Gray client.

The Allan Gray Retirement Umbrella Fund can be set up for any number of employees and is suitable for larger employers that may get the benefit of scale to pay lower administrative costs.

The minimum total contribution amount required from the scheme is R50 000 per month. We require the average contribution from members to be R1 000 per month.

You can contact our dedicated support specialists at groupsavings@allangray.co.za to obtain information about the product and the process of joining the Fund. 

If an employee resigns, they will stay invested in the Fund as a non-contributing member (also known as a paid-up member) of the Fund. Members will not be able to make additional contributions to the Fund but they will still have access to their investment. 

Learn more about the options available to an employee when they resign.

Traditionally, group risk benefits are offered within umbrella retirement funds. Our Umbrella Retirement Fund does not offer risk benefits as we believe in focussing solely on creating long-term wealth for your employees. If you require group risk benefits, contact your Business Development Manager who can help you find an independent risk benefits provider. 

While we are not authorised to provide financial advice, we believe that independent financial advice, whether through a scheme adviser or personal adviser, plays an important role in helping:

  • Employers to decide on the most appropriate retirement savings solution for their staff
  • Employees to make the best investment decisions for their circumstances

Members will pay the following fees to participate in the Fund:

  • An administration fee levied for administrative services.
  • An investment management fee, which will be dependent on the underlying investment portfolios that members are invested in.
  • If there is an adviser appointed to the scheme, members will pay a financial adviser fee.
  Group Retirement Annuity Umbrella Retirement Fund
Membership criteria The investment is individually owned by the member. Allan Gray administers the individually owned investment as part of the group on the employer’s behalf.  Members become part of the Fund through their employer, often as a condition of employment.
Advisor’s role The adviser may be required to give financial advice to members on an individual basis, according to the Financial Advisory and Intermediary Services (FAIS) Act.  The adviser is appointed by the employer for the scheme and is required to give advice to the broader scheme but not the individual.
Retirement Members may retire from the age of 55. Members can take one-third of their investment in cash and must transfer the remaining two-thirds to a product that will pay them an income, such as a living annuity or a guaranteed life annuity.

Members must retire from the Fund at the age stipulated in the special rules, unless they choose to defer their retirement. Pension fund members can take up to one-third of their investments in cash. Any amount not taken in cash must be transferred into a product that will pay an income in retirement, such as a living annuity or a guaranteed life annuity.

Provident fund members can take the full amount as a lump sum cash payment at retirement.

Pre-retirement withdrawal Members who have retirement annuities cannot access their benefits before age 55, except in certain circumstances (such as permanent disability or ill health, emigration, or if they have less than R7000 in their account). Members of the Fund can withdraw all or some of their savings in cash when they leave their employer. They have an option to automatically preserve part or all of their retirement savings into the Allan Gray Preservation Funds or leave it in the Fund and become a non-contributing member. 
Employer liability The employer’s role is limited to paying monthly contributions to Allan Gray on behalf of their employees.  An employer legally participates in the Fund and this brings a degree of fiduciary responsibility. 
Investment choice Members can choose their own selection of unit trusts from the Allan Gray investment platform as underlying investments. They can change their selection as their needs change. Each employer selects a default portfolio for their employees. Members have the option to change this default and select an alternative from the Umbrella Retirement Fund Portfolio List. 

The Fund must be notified of the member's death as soon as possible. The notification should include:

  • a copy of the member's death certificate,
  • the member's personal details, and
  • the member's investor number

The member's death benefit will be the market value of their investment accounts in the Fund. This figure is calculated on the day the deceased member's investments are switched into the Allan Gray Money Market Fund.

If an active member of the Fund emigrates, they will need to submit a request to resign from the employer and follow the resignation process. The Withdrawal turnaround time is 30 calendar days from the day of receiving notification from the employer. This is because a manual tax directive has to be applied for. Allan Gray will pay the amount into a valid South African bank account. Members can also remain paid up until they wish to withdraw from the Fund.

Paid-up members who may have immigrated and wish to withdraw from the Fund can submit a withdrawal instruction and a letter from the authorised dealer/South African bank rand-blocked account (on the bank's letterhead) stating the:

  • Account holder's name
  • Account number
  • Account is blocked

If an employer closes their company scheme, their scheme will be liquidated. Members will be entitled to their contributions, including their employer’s contributions and any investment returns. In addition, they are entitled to any amount that may have been transferred from the previous fund.

The member’s benefit will be paid once the liquidation process of the scheme is finalised, which takes approximately 6 to 12 months.

Members have the following options for their benefit:

  • Remain paid–up in the Allan Gray Umbrella Retirement Fund.
  • The benefit can be transferred to the Allan Gray Pension or Provident Preservation Fund.
  • The benefit can be transferred to another pension fund, provident fund or retirement annuity.
  • The benefit can be transferred to a registered preservation fund.
  • Members can withdraw the benefit amount in a cash lump sum (subject to tax).

Employees can use their secure online account to switch portfolios, change nominees and update their personal details. Additional contributions to the Umbrella Retirement Fund over and above the regular monthly amount cannot be done online and must be initiated through the payroll representative of the employer.

The financial services, products or investments referred to on this website are not available to persons resident in jurisdictions where their availability or distribution would contravene local laws or regulations and the information on this website is not intended for use by these persons. This website is for information only and does not in any way constitute a solicitation or offer by Allan Gray Proprietary Limited or any of its associates or subsidiaries (collectively “Allan Gray”) to buy or sell any financial instruments or to provide any investment advice or service.

By selecting one of the countries below I confirm that I have read and understood the above and that:

(a) I am not a South African citizen; or 
(b) I do not reside in the Republic of South Africa; or 
(c) I am not otherwise a person to whom the communication of the information contained in this website is prohibited by the laws of my home jurisdiction; and 
(d) I am not acting for the benefit of any such persons mentioned in (a),(b) and (c) and 
(e) I confirm that any investment with Allan Gray is based on my own initiative and not due to any offer or solicitation by Allan Gray.