We are temporarily revising the limits on allocations to offshore assets for Allan Gray Living Annuity and Endowment accounts and introducing consistent offshore limits for Allan Gray Tax-Free Investment accounts, effective 14:00 on Tuesday, 29 June 2021, as Allan Gray Life’s overall offshore exposure has not consistently reduced to below the limit prescribed and regulated by the South African Reserve Bank (SARB). The revised offshore limits are necessary as the SARB requires us to take swift and prudent actions to ensure that we comply with their exchange control regulations.
How will this affect your investments?
From 14:00 on Tuesday, 29 June 2021, you will be able to invest up to 40% of your Allan Gray Living Annuity, Endowment or Tax-Free Investment account’s total investment allocation into offshore assets. The limits will be managed based on each account’s overall offshore allocation, considering the offshore allocation in each underlying unit trust.
If you have less than 40% allocated to offshore assets, you will still be able to invest up to a maximum of 40%. However, if you have already reached or surpassed the 40% limit, you will not be able to increase your allocation to offshore assets. You are still able to transact (additional lump sum contributions, switches and debit orders), provided your accounts comply with the limits after each transaction. Allocation to offshore assets will be limited as follows:
Why are the offshore limits being revised?
When we first began limiting allocations to offshore assets for Allan Gray Living Annuity and Endowment accounts, the limits were set at 60%. Since implementing those offshore limits, higher-than-expected allocations to offshore assets within those limits, the performance of offshore assets relative to local assets and the movement of the rand relative to offshore currencies have meant that we have not been able to consistently maintain Allan Gray Life’s overall offshore exposure below the SARB’s offshore limit, as we had hoped.
The revised offshore limits will ensure that new Allan Gray Living Annuity, Endowment and Tax-Free Investment accounts will have an overall offshore exposure below the SARB’s offshore limit of 40%, while still allowing existing clients to maintain their existing allocations to offshore assets. Our aim is to have as small an impact as possible on you, while still taking steps to comply with the SARB’s exchange control regulations.
While the performance of offshore assets relative to local assets and the movement of the rand are outside of our control, we are confident that the revised offshore limits, along with the other actions that we are taking, will allow us to reduce Allan Gray Life’s overall offshore exposure and relax the offshore limits in future. We will continue to review the offshore limits on an ongoing basis and communicate adjustments based on Allan Gray Life’s available offshore capacity.
How to determine your allocations to offshore assets
Allocations to offshore assets for new investments, additional lump sum contributions, debit orders and switches will continue to be automatically validated when transacting via Allan Gray Online. Our Excel-based offshore allocation calculator will also continue to be available to determine your allocation to offshore assets.