Presented by High Street Asset Management
Industry News

Reimagining South African Retirement Investments: High Street’s Offshore-Focused Regulation 28 Compliant Fund

South Africa’s equity market has seen a decline, with Johannesburg Stock Exchange (JSE)-listed companies dropping from over 370 in mid-2018 to 279. This shift has reduced the continent’s largest equity market to less than 1% of the global equity market[i].

The JSE has returned 120% over the previous decade, significantly lower than the S&P 500’s 508% in Rands[ii].

Partially driven by the persistent depreciation of the Rand against the US Dollar, this has led to a material erosion of local investors’ global purchasing power.  

At the same time, South Africa’s fund industry has been booming, with over 1,700 Rand-denominated funds now available[iii].

This trend signifies that investors, including retail retirement savers, are seeking alternative and diversified investment strategies that go beyond the JSE’s limitations.

Liquidity limitations have led many large-cap funds to prioritise investments within the JSE Top 40 index, resulting in similar returns among managers and a prevalence of index-hugging.

High Street Asset Management (“High Street”) addresses this challenge with a differentiated offshore-focused Regulation 28 compliant balanced fund.

This balanced fund is designed for individuals and intermediaries seeking to diversify their retirement savings into offshore markets.

The High Street Balanced Prescient Fund[iv] provides over 90% Rand-hedge composition, catering to those wary of South Africa’s domestic economic and political risks.

It achieves this by utilising the maximum offshore allowances and, for the local component, invests in multinational companies listed on the JSE, such as Richemont and Bidcorp, alongside other select Rand-hedge companies with foreign-derived revenue streams.

This strategy is ideal for retirement annuities, pension, and provident funds looking for stability and growth opportunities beyond South Africa’s borders.

A critical aspect of High Street’s investment strategy is its emphasis on global diversification. As shown in a recent 5-year returns analysis, the ASISA South African – Multi-Asset – High Equity category peer average return closely mirrors a typical local passive benchmark for high equity retirement funds[v].

This correlation underlines the need for diversification, which High Street delivers by fully utilising the 45% offshore allocation and maintaining over 90% Rand-hedge exposure.

This approach offers South African investors a way to protect their global purchasing power while adhering to the requirements of Regulation 28 of the Pensions Funds Act.

Source: ASISA, High Street Asset Management & Bloomberg, 31/03/2024

Above is a graph illustrating the return comparison between ASISA’s South Africa – Multi Asset – High Equity category peer average and a typical local passive benchmark for high equity retirement funds[i].

The performance of 5 large funds within the category and the High Street Balanced Prescient Fund is also included for comparative purposes.

At High Street, our investment decisions are guided by the HighWay investment system, a proprietary approach that integrates fundamental research with the expertise of our dedicated team.

This method ensures that our decisions are well-informed and in line with the goals of our clients. Through this rigorous process, we are able to provide comprehensive offshore investment solutions tailored to the needs of South African investors looking to expand their portfolios.

In conclusion, amidst the ongoing debate between offshore and local investing, High Street remains committed to providing a differentiated retirement solution that aims to protect and grow investors’ wealth on a global scale, thereby mitigating risks associated with local market volatilities.

To learn more and visit High Street click here.

High Street Asset Management (Pty) Ltd is an authorised financial services provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002 with FSP number 45210.

Disclaimer:  The value of investments may go up as well as down and past performance is not necessarily a guide to future performance. There is no guarantee in respect of capital or returns in a portfolio. See full disclaimer: For more information on the key limitations, exclusions, risks and charges related to the financial service offered, please contact Ross Beckley on +27 11 325-4006.

[i] Conlias Mancuveni of Hollard Investments, published on 05/11/2023

[ii] High Street Asset Management & Bloomberg, 31/03/2024

[iii] Conlias Mancuveni of Hollard Investments, published on 05/11/2023

[iv] As of 25 April 2024, the High Street Balanced Prescient Fund was ranked 1st out of 221 funds in the ASISA

[v] ASISA, High Street Asset Management & Bloomberg, 31/03/2024

[vi] The benchmark comprises 75% SWIX All Share Index and 25% FTSE/JSE All Bond Index


Top JSE indices