Investing offshore just became a lot easier

The past year’s dive-and-revive manoeuvre of the rand against the dollar has once again shifted the focus to the importance of appropriate offshore investments. It’s during times of currency volatility that the timing of going offshore becomes the focus point among investors. But at Sanlam Investments we instead focus on giving clients the right type of offshore investment and less on trying to time the transaction, as the case for going offshore is supported by several other factors other than the antics of our currency.

The timeless case for going offshore

SA represents only about 1% of global GDP. Investors picking solely rand-based local investments are therefore missing out on a multitude of global investment opportunities, including sectors that have zero presence in SA, such as aircraft manufacturing.

Diversification across sectors and geographies is crucial, as countries don’t experience their growth cycles in sync. While Brazil may be deep in recession, China is still growing rapidly, for example. Diversifying your clients’ portfolios across several economies is therefore a relatively easy way to smooth out returns, which is particularly relevant now as clients are harbouring anxiety around prevailing market volatility.

In addition, the rand is a structurally weak currency as our current fiscal situation does not bode well for the rand. If it continues to decline over the long term, offshore investments can provide excellent protection against rand weakness and volatility. This can prove especially useful when your clients are planning future international studies or travel, or perhaps an offshore retirement. More and more we find that established SA clients are looking outside the SA market to preserve their wealth – also for future generations.

But several obstacles await advisers offshore

According to ASISA, there are now more than 1 500 funds to choose from locally – already a substantial amount to research and monitor – but globally this figure stands at over 50 000!

Where does one start? A second – and perhaps the most challenging – obstacle is the regulatory impact of choosing offshore funds for your clients’ portfolios. Documenting the fund selection and rebalancing process adequately, and following TCF guidelines by, among other things, reporting frequently and clearly to your clients on their portfolios’ progress can be particularly burdensome in the international environment across regulatory jurisdictions.

This is why we’ve crafted an offshore consulting solution

For a few years now Sanlam’s multi-manager team has successfully been offering a local investment consulting proposition to ensure compliance with TCF, with risk-profiled solutions, which will ensure all clients are treated fairly. (Under TCF advisers are under pressure to ensure that clients with similar risk profiles share similar portfolio construction and investment outcomes.) This same proposition is now also available for offshore investing.

Says Rafiq Taylor, head of Retail Implemented Consulting at Sanlam Multi Manager, “We’ve modelled five risk-profiled solutions to guide the construction of tailored investment portfolios, appropriate for clients fitting a certain risk profile. This will mitigate inconsistencies in portfolio returns for clients with similar levels of risk, ensuring consistency and fairness. These ‘model’ portfolios are then implemented and closely monitored by a dedicated investment committee. In all of this we are assisted by the UK-based Sanlam FOUR.” (Sanlam Multi Manager also created five multi asset funds available in USD and GBP.)

Two multi-manager teams on the job

Sanlam FOUR is an offshore multi-manager borne from an SA company, with a similar process to its SA-based sister multi-manager. Over time Sanlam FOUR has created partnerships with global asset managers through joint ownership and strategic mandate allocation. Within Sanlam FOUR there is a dedicated Fund Solutions team specialising in risk-targeted investment solutions. The team has been established for over 15 years, with experience across a range of asset classes. It is this team that manages the offshore consulting solution range.

Clients and advisers benefit from specialist market insights and economic research undertaken by both Sanlam’s SA- and offshore-based multi-manager teams. Among other things, they perform detailed fund analyses to gain a thorough understanding of the drivers of performance in

client portfolios, portfolio construction, tactical asset allocation, as well as risk management and compliance. In short, the multi-manager teams take care of not only portfolio construction for real returns, but also of regulatory requirements.

A key differentiator from competitors is that the Sanlam offshore consulting offering comprises of actual offshore managers, while its competitors mostly use SA-based asset managers with offshore offerings.

Offshore consulting solution packed with perks

The offshore consulting solution links the investment process to the adviser’s financial planning process, leading to real returns over specific targeted periods. The multi-manager’s tactical asset allocation process also assists the adviser with navigating uncertain markets. This way, some of the uncertainty in terms of meeting targeted returns are mitigated.

On a practice management level, the solution offers customised co-branded reports on an investment management and a client level, and client management becomes scalable via either a wrap fund or a fund of funds model.

But advisers have even more choice

Advisers who don’t want to make use of the full consulting proposition are also free to pick their own funds from Sanlam’s offshore equity capability for long-term real returns. These funds are available via the Sanlam Asset Management Ireland (SAMI) and Glacier International platforms.

They can of course also be used as underlying funds in the offshore consulting solutions. For example, a blend of the Sanlam Investment Management (SIM) Global Equity Income Fund (40%), the SIM Global Emerging Markets Fund (20%) and the Sanlam FOUR Stable Global Equity Fund A USD Acc (40%) offers an all-weather return relative to the MSCI global index.

A robust solution

When choosing our offshore consulting proposition, the outcome is a robust solution managed in a disciplined and cost-effective manner. Advisers will have peace of mind knowing that the end-to-end investment process is compliant, well-defined and well managed. They can also enjoy a real competitive advantage when it comes to proposing effective solutions, and will be distinctly differentiated from their industry counterparts.

Disclaimer

All reasonable steps have been taken to ensure the information in this article is accurate. The information to follow does not constitute financial advice as contemplated in terms of the Financial Advisory and Intermediary Services Act. Use or rely on this information at your own risk. Independent professional financial advice should always be sought before making an investment decision. International investments or investments in foreign securities could be accompanied by additional risks such as potential constraints on liquidity and repatriation of funds, macroeconomic risk, political risk, foreign exchange risk, tax risk, settlement risk as well as potential limitations on the availability of market information. There are also additional risks associated with foreign securities, such as macroeconomic, political, tax, settlement and foreign exchange risks.

Sanlam FOUR is a limited liability company incorporated in England & Wales with registered number 5809399 and having its registered office at 1 Ely Place, London EC1N 6RY. Sanlam FOUR is authorized and regulated by the Financial Conduct Authority.

Participation in the SIM Global Emerging Markets Fund, the Sanlam FOUR Stable Global Equity Fund A USD Acc and the SIM Global Equity Income Fund is a medium to long-term investment. The value of these portfolios are subject to fluctuation and past performance is not necessarily a guide to its future performance. Calculations are based on a lump sum investment with gross income reinvested on the ex-dividend date. All terms exclude costs. Actual investment performance will differ based on the fees applicable, the actual investment date and the date of reinvestment of income. A schedule of fees and maximum commissions is available from the Manager. The SIM Global Emerging Markets Fund, the Sanlam FOUR Stable Global Equity Fund A USD Acc and the SIM Global Equity Income Fund are sub-funds of the Sanlam Universal Funds plc, an open-ended umbrella type investment company, with segregated liability between its sub-funds, authorised by the Central Bank of Ireland, as an undertaking for collective investment in transferable securities under the European Communities (UCITS) Regulation, 2003 as amended (the Regulations).

The SIM Global Emerging Markets Fund, the Sanlam FOUR Stable Global Equity Fund A USD Acc and the SIM Global Equity Income Fund are managed by Sanlam Asset Management (Ireland) Limited, Beech House, Beech Hill Road, Dublin 4, Ireland, Tel + 353 1 205 3510, Fax + 353 1 205 3521 which is authorised by the Central Bank of Ireland, as a UCITS IV Management Company and an Alternative Investment Fund Manager, and is licensed as a Financial Service Provider in terms of Section 8 of the South African FAIS Act of 2002. SAMI has appointed Sanlam FOUR Investments UK Ltd as Investment Manager to the Sanlam FOUR Stable Global Equity Fund A USD Acc. Sanlam Investment Management (Pty) Limited (SIM) is the Investment Manager of the SIM Global Emerging Markets Fund and the SIM Global Equity Income Fund, responsible for managing the Fund’s investments. The Sanlam Universal Funds Plc full prospectus, the Fund supplements, and the KIID is available free of charge from the Manager or at www.sanlam.ie. This is neither an offer to sell, nor a solicitation to buy any securities in any fund managed by us. Any offering is made only pursuant to the relevant offering document, together with the current financial statements of the relevant fund, and the relevant subscription application forms, all of which must be read in their entirety together with the Sanlam Universal Funds plc prospectus, Fund supplement and the KIID. No offer to purchase securities will be made or accepted prior to receipt by the offeree of these documents, and the completion of all appropriate documentation. Past performance of a fund is no guarantee as to its performance in the future. Independent Financial advice, should be sought as not all investments are suitable for all investors.

Collective Investment Schemes (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. Collective investment schemes are traded at ruling prices and can engage in borrowing and script lending, a schedule of fees and charges and maximum commission is available on request from the manager, no guarantee can be given in respect to the capital or return on the portfolio.

All potential risks are disclosed in the supplement. Fluctuations or movements in exchange rates may cause the value of underlying investments to go up or down. The fund price is calculated on a net asset value basis, which is the total value of all assets in the portfolio including any income and expense accruals. Trail commission and incentives may be paid and are for the account of the manager.

Sanlam Asset Management is a registered business name of Sanlam Asset Management (Ireland) Limited. The SIM Global Emerging Markets Fund, the Sanlam FOUR Stable Global Equity Fund A USD Acc A USD Acc and the SIM Global Equity Income Fund are Section 65 approved funds under the Collective Investment Schemes Control Act 45, 2002 (CISCA). Sanlam Collective Investments (RF) (Pty) Ltd is the South African Representative Office for these funds.

The Manager has the right to close any Portfolios to new investors to manage them more efficiently in accordance with their mandates.

The portfolio management of all the portfolios are outsourced to Regulated and authorised financial services providers.

KB1115(04)0116 SA Inst

Sanlam Investments consists of the following authorised Financial Services Providers: Sanlam Investment Management (Pty) Ltd (“SIM”), Sanlam Multi Manager International (Pty) Ltd (“SMMI”), Satrix Managers (RF) (Pty) Ltd, Graviton Wealth Management (Pty) Ltd (“GWM”), Graviton Financial Partners (Pty) Ltd (“GFP”), Radius Administrative Services (Pty) Ltd (“Radius”), Blue Ink Investments (Pty) Ltd (“Blue Ink”), Sanlam Capital Markets (Pty) Ltd (“SCM”), Sanlam Private Wealth (Pty) Ltd (“SPW”), Sanlam Credit Fund Advisor Proprietary Limited, Sanlam Africa Real Estate Advisor Proprietary Limited and Sanlam Employee Benefits (“SEB”), a division of Sanlam Life Insurance Limited; and has the following approved Management Companies under the Collective Investment Schemes Control Act: Sanlam Collective Investments (RF) (Pty) Ltd (“SCI”) and Satrix Managers (RF) (Pty) Ltd (“Satrix”).