Sygnia has once again made headlines by launching new US dollar-based offshore funds. Kyle Hulett, Head of Investments for Sygnia Asset Management, explains the rationale behind the bold move.
While most investment companies have been buckling down and taking a “wait and see” approach during these tumultuous times, Sygnia has boldly launched three new offshore funds.
The new funds mirror Sygnia’s high-performing thematic funds that have been available in South Africa for some time: the Sygnia 4th Industrial Revolution Global Equity Fund; Sygnia Global Income Fund; Sygnia Health Innovation Global Equity Fund.
Some minor differences notwithstanding, the three new offshore funds track the same benchmarks as their counterparts. So what makes the new offshore funds so noteworthy?
The simple answer is that this is the first time Sygnia has launched US dollar-based funds held entirely offshore (UCITS funds domiciled in Ireland and governed by European regulations).
The more complex answer is why we’ve done so…
Offshore Options for SA Investors
The first reason is that we can now offer South African investors looking to use their foreign currency allocation another, very attractive option to invest offshore.
The offshore funds are not subject to South African regulations, taxes and restrictions, due to being domiciled in Ireland. This means South African investors can access the funds without having to bring their investment back into South Africa.
If you’re investing from South Africa (i.e. you are required to take Rands out of South Africa for an offshore investment), each South African adult (18 years or older) resident may take R1 million offshore per calendar year without tax clearance. You may also take an additional R10 million per calendar year offshore, but only with tax clearance. These allowances exclude funds that are already abroad.
Bringing Sygnia To The World
The second reason is that we are confident our specialised thematic funds offer international investors a unique investment opportunity.
The Health Innovation Global Equity Fund and the 4th Industrial Revolution Global Equity Fund, in particular, are frontrunners in thematic investing. These funds offer the opportunity to invest in pioneering innovations that are forging the future of humankind in terms of health, economic and energy sustainability.
These highly specialised funds are at the forefront of thematic investment trends, and it is on the back of this that we are boldly throwing down the gauntlet: Sygnia is now a global player on the thematic investment front.
Same-same, But Different
While the new funds have the same names and follow the same benchmarks as their SA-based sister funds, there are a few intrinsic differences.
Firstly, we have added an Environmental, Social and Governance (ESG) overlay on the new international funds, which we are confident will add long term value to investors.
Secondly, the entry level investment is higher. The minimum initial investment is US$10,000 as a lump sum payment, whereas the SA funds require an investment of R10,000 as a lump sum payment or R500 per month as a debit order.
Lastly, in terms of returns there will also be a difference in performance due to reporting being based in Rands on SA funds and in USD for international funds.
Sygnia’s new offshore fund range is now available to both domestic and international investors, and it’s just the start: we plan to add another two funds focused on future technologies and China’s new economies to the fund range shortly. Watch this space!