Sygnia Launches New Fund to Assist Offshore-Maxed SA Investors

Regulations have for a considerable while significantly limited the resources South Africans can channel directly offshore, particularly concerning retirement and living annuities. Those restrictions are set to tighten further due to the JSE’s index harmonisation, causing concern for many investors.

Promptly responding to these imminent constraints, Sygnia Asset Management has developed an alternate offshore solution, dubbed the Sygnia Life Transnational Equity Fund. This innovative fund offers an actively administered equity portfolio that invests in JSE-listed equities with recurrently foreign revenues, providing a global revenue exposure of 95%.

The Sygnia Life Transnational Equity Fund offers an elegant workaround to the stringent regulations, as it is regarded, from a regulatory viewpoint, as South African equities. As a result, the fund bypasses the global limit for retirement or living annuities, allowing South African investors to maximize international revenue exposure beyond the current 45% global limit.

The launch of a sister fund, the Sygnia Transnational Equity Unit Trust, is also in the pipeline. The essential distinguishing factor with the forthcoming fund is that it will be presented in a unit trust format, as opposed to an investment policy.

Investors who have maximized their 45% retirement or living annuity offshore allocation are facing increasing concerns due to JSE’s recent focus on domestic stocks in its indices. The ongoing harmonisation process of the FTSE/JSE Index Series is likely to reduce All Share Index’s foreign revenue exposure from the current 65% to match SWIX’s 50%. This impending change introduces new challenges to investors who traditionally relied on the All Share as a default option to increase offshore exposure.

However, the creation of the Sygnia Life Transnational Equity Fund provides a much-needed solution. With its 95% foreign revenue exposure, it offers investors prospects to significantly increase offshore exposure.

Regarded as a high-risk fund due to concentration, sector and currency risks, the Sygnia Life Transnational Equity Fund provides an effective solution for constrained medical scheme investments in addition to promising increased offshore growth.

Although this new fund may appear potentially volatile due to short-term market fluctuations, it has demonstrated an estimated outperformance of 4. 6% over the last five years compared to the Capped SWIX. Furthermore, its generous low fees provide investors high-value benefits for an actively managed fund.

Sygnia designed the fund specifically for investors striving to maximize offshore investment beyond the limitations posed by current regulations. Given South Africa’s diminished prospects for domestic growth, alternate options like the Sygnia Life Transnational Equity Fund and its upcoming sister fund offer promising relief to offshore-maxed investors.