Daniel van Andel, head of Platform and Adviser Proposition at Allan Gray

Stick to your goals and maintain a diversified portfolio‍

Recent geopolitical tensions in the Middle East have triggered sharp swings in global and local markets, with oil prices surging above US$100 a barrel before retreating on hopes of the conflict easing. These developments have reignited concerns around inflation and interest rates, while also highlighting how quickly market sentiment can shift.

“While it is hard not to get caught up in the daily news flow and social media exchanges, as an investor, acting on this information is typically not prudent; rather remain focused on your long-term objectives and ensure your portfolios are appropriately diversified to weather market shocks,” says Daniel van Andel, head of Platform and Adviser Proposition at Allan Gray.

In a timely development, South African investors have recently been granted greater flexibility to diversify globally following the official increase in the single discretionary allowance (SDA) that was announced in February’s budget speech.

“From 8 April 2026, individuals can externalise up to R2 million per year without requiring prior approval from the South African Revenue Service (SARS) – double the previous limit. This is the first adjustment in 15 years and reflects the impact of inflation and currency depreciation over time. It is great news as it removes some of the friction for investors to build offshore exposure,” van Andel explains.

How to take advantage of the R2 million single discretionary allowance to invest offshore

The SDA forms part of the South African Reserve Bank’s exchange control framework and allows individuals to transfer funds offshore for any legal purpose, including investment and travel, without tax clearance. The allowance is granted per calendar year to South African residents aged 18 and older.

“For 2026, individuals can use the full R2 million allowance, despite the change taking effect partway through the year. It is important to note that the SDA covers all foreign expenditure, including travel and offshore card spend, which counts toward the annual limit,” van Andel notes, adding that investors must account for these amounts when considering how much they plan to invest each year.

Those wishing to invest more than R2 million offshore can apply for a tax clearance certificate from SARS under the Foreign Investment Allowance, which permits up to R10 million per year, over and above the R2 million SDA. Amounts above this require specific approval from the Reserve Bank.

Expanding access to global investing

Offshore investing is often perceived as complex or reserved for wealthy individuals, but there are accessible options available to meet different needs.

Many South Africans use rands to invest in rand-denominated unit trusts, which are broadly available. Those looking to invest in foreign currency use their offshore allowance each year to invest in global markets and in foreign currency investment options.

“Platforms such as the Allan Gray Offshore Investment Platform make the process of investing offshore much easier. We provide access to foreign currency-denominated funds, including those managed by our sister company, Orbis. Our platform enables investors to hold assets directly offshore, offering greater flexibility and access to a broader opportunity set than is typically available through locally domiciled funds,” says van Andel.

“Investing offshore directly can also offer other benefits, including the ability to withdraw funds into an offshore bank account and potential tax efficiencies depending on currency movements. In addition, offshore investments are not subject to VAT on administration fees.”

Additional benefits through offshore endowments

For investors seeking further tax and estate-planning advantages, an offshore endowment may be a suitable option.

“Offshore endowments, like the Allan Gray Offshore Endowment (offered via the Allan Gray Offshore Investment Platform), offer fixed tax rates – 30% on income and 12% on capital gains – which may be beneficial for higher-income investors,” he notes.

“These structures can also simplify estate planning, allowing for smoother transfer of assets to beneficiaries without the need for an offshore will or executor’s fees, while offering potential protection from creditors under certain conditions.”

Don’t be whipsawed by the rand

Currency is an important consideration, and South African investors often anchor their decisions to movements in the rand – increasing offshore exposure when the currency weakens and pulling back when it strengthens.

“This is risky,”  van Andel explains. “Trying to time these movements – particularly in a volatile currency like the rand – can lead to poor outcomes, with investors effectively being whipsawed into making short-term decisions that undermine long-term strategy. A more effective approach is to maintain a consistent level of global diversification aligned with long-term objectives, rather than reacting to short-term currency fluctuations.”

A long-term approach remains key

While the increase in the SDA provides a valuable opportunity for South Africans to expand their global investment exposure, it should be considered within the context of a well-diversified, long-term investment strategy.

“Market volatility, particularly when driven by geopolitical events, can be unsettling, but it also reinforces the importance of diversification,” emphasises van Andel. “Having exposure to different regions and currencies can help manage risk and improve long-term outcomes.”

Everyone’s needs are different. “We encourage investors to seek guidance from independent financial advisers to determine the appropriate level of offshore exposure based on their individual goals and circumstances,” van Andel concludes.