Offshore Investing in the World of COVID-19

Offshore Investing in the world of COVID-19

Stephanie Bakhuis

Given recent events and the uncertainty around the world, queries about offshore investing are at an all-time high. Although COVID-19 certainly has a role to play, questions and discussions around investing offshore are always extremely topical amongst South Africans. This topic evokes emotion and brings up many questions, which if answered correctly, will enable you to make sound financial decisions in keeping with your long-term financial plan.

The Why

Why Should I invest offshore? Well, as South Africans, having exposure to offshore assets is essential for the following reasons: it provides protection against inherent risks in South Africa and the depreciation of the Rand; it helps to diversify investments, and it allows access to a greater range of opportunities to invest in.

The How

There are two ways in which you can invest offshore. The first is taking a direct route, which means that you physically buy offshore currency, for example, US Dollars. Once the money is in offshore currency, you can invest those US Dollars in various offshore investments.

The second is through asset swops or feeder funds. By investing via asset swops or feeder funds, your money never has to change from Rands to an offshore currency. It is the chosen investments of underlying funds that you choose that gives you the exposure to offshore assets.

Your Financial Plan

The big question is, does investing offshore make sense in terms of your Financial Plan? Direct versus asset swop offshore investing often has a different place in investors’ portfolios, and we often forget that many of us already have offshore exposure.

At Chartered, we separate clients investments into Retirement Assets and Surplus Assets.

With clients Retirement Assets, we aim to have the right balance between local and offshore exposure. This is based on expected future growth and the need to beat inflation in South Africa. This would be done via asset swops, because this money is needed to fund future expenses, and therefore needs to be flexible and liquid. Often bringing money back from overseas is costly and impractical.

With Surplus Assets, we tend to invest this money directly offshore. This allows us to buy foreign currency which will be held offshore and doesn’t need to come back to Rands. This route of investing is often seen as a kind of “insurance policy” for South Africans. In some circumstances, depending on the amount, you may need to apply for clearance.

Investing directly offshore is generally warranted with larger amounts given currency fees and the costs of investing offshore. Making use of asset swops can be a great opportunity to gain offshore exposure with smaller amounts.

The When

Is now a good time to invest offshore? It is a gamble to try and time currency because the Rand is volatile. We forget that the Rand went to more than R16 to the Dollar in 2016.

At the time, this seemed impossible. In 2020 we have gone from R14 to over R19 and all the way back to around R16.50 in a matter of a few weeks. At the time of writing, the Rand is back up to R17.20.

If we stay true to the long-term nature mentioned for Surplus Assets or Assets that are not needed over 10+ years, then what we pay for our US Dollars is less important.

Global markets are still trying to make sense of the virus, the impact on economies and the effect of all the stimulus packages seen around the globe.

With such uncertainty, both globally and locally, any investing should be done with extreme caution and in line with your Financial Plan. The decision should not be an emotional one. Now more than ever, professional advice is crucial to making the right decision for your long-term wealth.

For a more in-depth discussion on this topic, listen to our podcast.


Given recent events and the uncertainty around the world, queries about offshore investing are at an all-time high. Kim Potgieter and Stephanie Bakhuis delve deeper into the why, the how and the when of offshore investing, and how it ties into your Financial Plan.

Comments (2)

  • Hi Steff & Kim thanks for an interesting talk its a topic that I have often considered, albeit that my portfolio already hold about 35% in offshore investment via local funds. Several of my friends have considerably more in offshore investments one claiming near 90% so in your opinion what is a reasonable level of offshore investment or are there other factors to consider?
    BTW my 90% friend has no confidence in any African country having lost most of his fortune when leaving Zimbabwe so he is a special case.

    • Hi Randall. Thank you for listening. How much money you have offshore often relates to your own personal Financial Plan. There is often a fine line between too much and too little offshore depending on your circumstances. We need to be careful with investing too much of our clients “Retirement Assets” referred to in the podcast in offshore assets because we add an additional layer of volatility and risk in doing so – the movement of the Rand. However, if you plan to emigrate for example, having a strong offshore component could be an option. So you are correct, there are other factors to consider and certainly worth raising with your Retiremeant™ Specialist. Thanks once again for listening.

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