The key benefit of an international approach is the breadth of the investment opportunities and the size of the investable universe. To place SA in perspective, at 0.56% of the world’s economy, we are roughly as big as the US state of Michigan. This means a world of potential lies in offshore investment opportunities.

Research has shown that it is important to diversify your portfolio; not only in different asset classes, but also in different jurisdictions. It has also shown that, in order to effectively outperform inflation by 5% or more, a significant portion of your portfolio should have offshore exposure. This is a strategic objective and would need to be assessed for each client’s individual needs.

The portfolio allocation used for offshore investments depends on each client’s needs, but is based on substantial quantitative analyses which seek to minimise risk, maximise return, and use the best possible blend of offshore funds and managers in order to achieve such results.

HISEC looks for five imperative realities when placing local investments. This is a crucial differentiator in how we add value to our clients:

• We separate insurance specialists from investment specialists
• We seek investment managers who have experience and effective research ability
• We have regular and focused contact sessions with the investment decision-makers and portfolio managers, enabling us to provide informed feedback on return expectations and management of investor emotions

The investment type you need will depend on your requirements and the potential time frame of your investment. There are three main investment types which are appropriate for discretionary investments:

• Standard Investment (Unit Trusts)

A unit trust is a suitable investment if you who want to invest after-taxed capital over the medium to long term. Unit trusts are divided in different risk categories and suitability depends on your needs and risk profile.

You can make lump sum contributions or debit order contributions – whichever suits you best. Money invested in a unit trust is easily accessible and can usually be withdrawn within a few days. 

• Endowment Investment

An endowment investment is a tax-effective savings vehicle, a long-term investment vehicle by nature, with a minimum investment period being five years. It is, however, possible to access some funds before the five-year period in the event of an emergency, but there are restrictions on the withdrawal.

An endowment investment could be appropriate for trusts, offshore investments or high net worth investors whose marginal tax rate exceeds 30%. An endowment investment is therefore a suitable investment vehicle for investors with a high tax rate, who want to invest after-taxed capital over the medium to long term.

• Tax-Free Savings Accounts

A tax-free savings account is a useful tool if you want to invest after-taxed capital over the medium to long term, and benefit from a totally tax-free return. There are, however, annual contribution limits which should be considered.