Big asset managers put a stop to your offshore investments, push to keep exchange controls

A little gem that fell out of the lips of a highly paid investment professional during an interview at his Pinelands office has never left me: ‘Asset management is a licence to print money.’ And, for many, it is – whether you own the companies that generate annuity income streams based on the assets under management or are receiving one of those huge salaries, with bonuses.

In South Africa, the industry has had extra cushions protecting its revenues: exchange controls that compel taxpayers and residents to mostly save in domestic assets; and tax incentives that push savings into vehicles like SA-based Retirement Annuities.

Offshore investing by its nature excludes many hard-working savers because it tends to require large minimum sums and expert insights on a range of financial matters, from tax to geographic vagaries. For a few weeks, it seemed as though the world had opened up to ordinary investors with even only a few hundred rands to set aside each month when the SA Reserve Bank released a circular allowing for Exchange Traded Funds based on foreign indices to be regarded as domestic.

But, as Sygnia founder CEO Magda Wierzycka – whose company was set to benefit from the easing – points out, the gate has been closed again. Why? Because greedy corporates, SA-focused investment managers and others who run the influential bodies behind the scenes have put a stop to it, to protect their wealth – not yours.

You can read more about this battle, and why it really does impact on your pocket, even if you chose not to have exposure to a Sygnia fund in your portfolio, here: ‘Greedy’ asset managers control YOUR savings, by blocking offshore investment – Sygnia.

You can also listen to this story.

And look out for more interviews on this topic in this list:

Most Popular Podcasts on BizNews this week

  1. Wierzycka, Heystek on revolutionary change for SA savers – retirement funds’ 30% foreign cap removed
  2. Zuma, corruption and state capture: Latest developments at Zondo, what’s next for Zuma – The Editor’s Desk
  3. Inside Investing Ep 11: Big company greed-driven lobbying killed RA breakthough – Wierzycka, Heystek
  4. Inside Investing – RA breakthrough; overlooked 4Sight; why Anchor Capital leaving; IRR raining on Cyril’s parade. Ep 10
  5. Offshore investing from your SA armchair
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  7. BizBriefing: Jacob Zuma recusal bid denied, ABSA profits plummet, Cheques obsolete
  8. What’s next for the Rand, SA after ratings downgrades – Forex expert Andy Rissik
  9. SA authorities back-pedal on easing exchange controls for ETFs – independent advisor unpicks the details, implications
  10. Inside Covid-19: Vaccine race; SA’s PANDA goes global; pandemic damages, scars minds

PS:

  • Independent financial advisors Wynand Gouws, wealth manager at Gradidge-Mahura, and Dawn Ridler of Kerenga Wealth Ecology are available to answer your questions about global assets as well as your domestic savings in this week’s Friday Finance webinar, with a special focus on how to pay less tax when you retire. The webinar is free, but you must register: https://register.gotowebinar.com/register/6646694434270030861.
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