MoneyMarketing March 2026

31 MARCH 2026

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WHAT’S INSIDE YOUR MARCH ISSUE:

OFFSHORE INVESTING IN A VOLATILE WORLD

Investigating strategies for currency resilience and long-term global growth opportunities.

Cover story + pg24-30

THE POWER OF PROPERTY INVESTING

From listed property to rental units, property continues to be a strong investment strategy for resilient income and long-term growth.

Pg8-11

WHY FIDUCIARY DUTY MATTERS

How advisers can protect clients, ensure compliance and manage retirement and investment responsibilities effectively.

Pg12-17

MAKING HEDGE FUNDS WORK

Diversification, downside protection and disciplined alternative return strategies set the scene.

Pg18-20

ESG INVESTING:

BEHIND THE HYPE

How sustainable impact, responsible practices and longterm financial performance are meeting the mark for investors.

Pg20-23

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Offshore investing: Beyond the rand hedge

By Sandy Welch Editor MoneyMarketing

For South African investors, offshore investing is a structural necessity. But where offshore exposure was once driven largely by fear of rand weakness or political risk, it now requires a far more nuanced approach that integrates currency dynamics, global asset allocation, lifestyle modelling and disciplined advice.

Christelle Louw, who operates within the Citadel’s advisory-led wealth management framework, explains that when it comes to discussing offshore investing with clients, she always anchors the conversation in lifestyle expectations. “We often do a lifestyle projection. It’s not about investments initially. It’s about asking: What kind of life do you want? Do you want to travel? Support children? Maintain a certain standard of living? And what is the probability of achieving that?”

Advisers are too often expected to “make the portfolio work” to match unrealistic expectations. “We can’t grow a portfolio at 30% because someone needs it to. The model must be achievable and right. The strategy must be realistic.” Only once that framework is established does offshore allocation become meaningful.

Why offshore remains essential

South Africa accounts for roughly 0.4% of global growth. “It’s simply not rational to have the bulk of your wealth concentrated in such a small part of the global economy,” Louw says. That is not a dismissal of local markets. The JSE is sophisticated, and around 60% of its listed company revenues are generated offshore. But investors remain exposed to a single market and jurisdiction. “From a portfolio construction perspective, that’s the risk.”

Today’s offshore case extends beyond capital flight. It is about access to scale and sectors that do not exist locally. Global healthcare innovation, advanced technology infrastructure and major consumer brands require offshore exposure. “If you want access to the world’s largest companies, those driving AI, pharmaceuticals and global demand, you need offshore allocation.”

The currency narrative has shifted

For years, rand depreciation provided a tailwind, reinforcing the idea that offshore investing was primarily a currency hedge. That dynamic is no longer predictable. “In the past year, the rand has strengthened meaningfully,” Louw says. Over the past

decade, it has been more stable than many assume. With inflation differentials narrowing, Citadel expects more modest long-term depreciation, closer to 2% to 3% rather than the historical 5%.

“You cannot build an offshore strategy purely on perpetual rand weakness,” she emphasises. “It must be about diversification and access to global growth.”

Rand-based or hard-currency objective?

A critical distinction advisers must clarify is how offshore wealth is measured. “There are essentially two objectives,” Louw says. “You either diversify offshore but still measure wealth in rand because you live in South Africa, or you externalise wealth permanently and measure in hard currency.”

These are different mandates. Clients planning to emigrate, fund overseas education, or establish offshore legacy structures require a different framework from those simply diversifying within a domestic lifestyle plan. Currency exposure can also be managed within portfolios. “Timeous currency hedging remains an alternative to naked currency exposure,” she notes. On timing, Louw favours phased implementation. “If you get currency timing 100% right, you were probably lucky.”

Global diversification is broader than the dollar

The traditional offshore playbook is centred heavily on the US. But currency diversification itself is becoming more relevant. Periods of dollar weakness have strengthened the case for exposure to sterling, the euro and the Swiss franc.

Large multinational companies provide indirect currency diversification through global revenue streams. The major US technology firms generate earnings across jurisdictions, offering natural geographic hedges. Diversification also extends beyond US equities. European markets have outperformed at times, and emerging markets – particularly parts of Asia – remain attractively valued relative to developed peers. Exposure, however, must be deliberate rather than thematic.

Segmenting by life stage

Client age and objectives fundamentally shape offshore allocation. “For younger accumulators, time is their greatest asset,” Louw says. Longer horizons allow for meaningful offshore equity exposure, absorbing shortterm volatility. Retirees require more nuance. “Income must be generated in the currency of reference.” For South Africans spending in rand, drawing dollar income introduces unnecessary volatility.

Continued from previous page

Citadel typically segments retirement portfolios into layers:

• Income layer: Held in the spending currency for stability

• Near-term capital (around two years of expenses): Balanced local and offshore exposure

• Growth layer: Often 40% to 70% offshore, depending on risk tolerance and legacy goals.

“You don’t want currency volatility affecting groceries,” Louw says. “But you still want global growth working for you.”

Offshore as intergenerational planning

Modern families are increasingly going global. “Many South Africans have children living overseas,” Louw notes. Structuring legacy entirely in rand may not serve beneficiaries based in the UK, Europe, Australia or the US. “You don’t structure legacy money for a 70-year-old,” she says. “You structure it for the 35-year-old who will inherit it.” In these cases, offshore exposure becomes intergenerational alignment rather than simple diversification.

Valuations and concentration risk

Global equity returns have been driven by a concentrated group of mega-cap technology stocks, prompting comparisons to past bubbles. “We do have strong exposure to the top six,” Louw says. “These are super-scalers generating real earnings.” AI infrastructure is already profitable, even if its full commercial potential is still emerging. “It’s not going away.” That said, diversification remains critical. Global markets extend far beyond a handful of names, and Citadel maintains exposure across regions, asset classes, and defensive allocations such as gold where conviction supports it.

Building resilient offshore portfolios

Equity must be balanced with fixed income, liquidity and alternatives. Hard-currency cash has delivered yields of around 4% to 4.5% in recent years, competing with traditional bonds. Developed market investment-grade bonds provide structural stability that South Africa’s subinvestment-grade status cannot always match.

“Hedge funds have a place, but only if you understand them,” Louw says. They are expensive and often illiquid, but can provide downside protection in the right structures. Private equity demands even greater caution. “You become a business owner in something you don’t control.” Allocations to private markets should be modest and reserved for investors who can tolerate illiquidity and potential loss.

Structuring risk and situs tax

One of the most overlooked dangers is holding foreign-listed shares directly in one’s personal name. Certain jurisdictions levy estate taxes on non-residents holding locally domiciled assets. In the US, exposure above $60 000 can trigger estate tax. “That’s not a large threshold,” Louw says. Beyond tax, assets can be frozen for

extended periods during administration.

The UK also imposes inheritance tax on certain UK-domiciled assets held by non-residents, with a higher threshold but similar administrative complexity. “It’s not just the tax,” she warns. “It’s the liquidity and delays. Advisers must understand this.” Offshore investing is therefore a structuring decision, not simply an asset allocation one.

The rise of offshore wrappers

International endowments – offshore wrappers – have become increasingly prominent. “They’re efficient vehicles for holding offshore assets,”

Louw says. Unlike traditional South African endowments, international versions offer greater liquidity and flexibility. Securities are held within the structure rather than in the investor’s personal name, potentially mitigating foreign estate exposure and simplifying administration.

From a South African tax perspective, wrappers can offer arbitrage for high-income individuals. Income is taxed at 30% inside the structure versus up to 45% personally; capital gains at 12% versus 18%. For higher marginal taxpayers, the differential compounds meaningfully over time. “It’s not about avoiding tax,” she says. “It’s about structuring efficiently within the law.” Wrappers also assist succession planning, allowing assets to pass via beneficiary nomination rather than a traditional executor-driven estate process.

Overseas pensions mean opportunity with caution Offshore pensions can provide valuable hard-currency income diversification later in life. However, Louw cautions against overconcentration. “These structures are often abused by allocating too much capital without assessing actual requirements.” They should form part of a broader plan, not replace it.

The next phase

Economic cycles have compressed. “Recoveries that once took years now happen in months,” Louw says. That demands agility in asset allocation and fund selection. Currency diversification will likely broaden rather than replace the US dollar. Emerging markets, particularly in Asia, remain attractively valued, though volatility will persist.

Sector access remains a core offshore driver: healthcare innovation, global technology infrastructure, and specialised alternative strategies remain underrepresented locally. Impact and ESG strategies are also gaining traction. “There’s a perception that impact investing means sacrificing returns,” Louw says. “That’s not necessarily true.” International opportunities in renewable energy and infrastructure can generate competitive yield.

Discipline over drama

As offshore investing enters its next chapter, the question is no longer whether to externalise capital, but how to do so intelligently. For advisers, that means segmentation, realistic expectations, structural awareness and

ED'S LETTER

March arrives with a noticeably lighter national mood. After several years defined by volatility, policy uncertainty and energy constraints, there is a growing sense that South Africa may finally be turning a corner. Business confidence has edged higher, inflation has moderated, and reforms – while uneven – are beginning to translate into cautious optimism. For financial advisers, this positive sentiment is welcome. But optimism, as ever, must be matched with discipline. This issue reflects that balance.

We examine offshore investing not as a feardriven currency hedge, but as a structural allocation decision requiring thoughtful segmentation, tax awareness and behavioural coaching. Our property feature explores how advisers should assess real assets in a shifting rate environment, weighing income resilience against valuation risk. In fiduciary duty, we revisit the core responsibility to act in clients’ best interests, particularly as structures, products and crossborder considerations grow more complex.

We also tackle ESG investing at a time when global narratives are telling different stories. Beyond labels, what does responsible investing truly mean for long-term risk and return? And in hedge funds, we interrogate where alternative strategies genuinely add diversification and where complexity can obscure value.

If there is a common thread this month, it is intentionality. Whether allocating offshore, selecting alternatives or structuring estates, strategy must overcome emotion. As confidence cautiously rebuilds in South Africa, advisers remain the critical filter between sentiment and sound financial outcomes.

Stay financially savvy,

Sandy Welch Editor, MoneyMarketing

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behavioural coaching. Offshore investing in 2026 is less about bold macro calls and more about disciplined execution. As Louw puts it: “Have a strategy. Make sure you’re comfortable with it. And then stick to it.”

George Mahlakgane, Franchise Principal and Financial Adviser at Consult

Flora Park in Polokwane

From starting out as a claims clerk to becoming a top-performing adviser and Franchise Principal, George’s journey is rooted in service, relationships and understanding people before offering solutions.

Why did you become a financial adviser – was it something you always wanted to do?

What people don’t know is that I started off my career as a teacher before joining in the financial services as a claims clerk at Mutual & Federal. It wasn’t something I set out to do, but I had the passion to guide and teach people. I quickly realised that this industry wasn’t about selling products, it’s about serving people. I loved the idea of making a tangible difference in people’s lives, helping them protect what matters most. That desire to serve naturally drew me into financial advice.

Tell us a bit about your journey, and why you decided to join Consult.

My journey spans 25 years, starting at the bottom as a claims clerk and gradually moving into advisory roles. Along the way, I learned that long-term success comes from relationships, not transactions. In November 2017, I joined Consult because their purpose aligns with my own: “We consult to build and protect our clients’ dreams.” The Consult model gave me independence, support, and the chance to grow as a top-performing adviser and now as a Franchise Principal.

What was your first meaningful personal successful investment?

One of the early investments that really mattered was when I helped a client navigate a major insurance claim after their home burned down. Seeing the family recover and return to a restored home reinforced the value of protection and advice. It showed me that meaningful investment is about people and security, not just numbers.

“I loved the idea of making a tangible difference in people’s lives, helping them protect what matters most”

What have been your best and worst personal financial decisions?

My worst personal financial decision was in 2005, when I was still working in the bank. I purchased two holiday home properties without properly researching the profitability of the area. That experience highlighted the importance of careful financial planning and seeking sound advice, and it taught me a valuable lesson.

What sets you apart in terms of how you deal with clients?

I put people first. I don’t come with readymade solutions; I listen, understand their goals, fears and family realities, and then guide them with personalised advice. I see every interaction as an opportunity to build or protect someone’s dream – whether it’s a young professional starting an investment or a family facing a major life event.

What is your biggest challenge when it comes to dealing with clients?

The biggest challenge is helping clients navigate complex financial decisions while keeping their focus on long-term goals. Sometimes the immediate situation can feel urgent, but I aim to ensure every decision aligns with their bigger picture. This is especially true when working in communities where people are less familiar with financial planning and advisers. Bringing these clients to a place of understanding and confidence about their options takes time and patience, but it’s incredibly rewarding when they start making informed decisions that protect and grow their futures.

What would you say makes a good investment in the current environment?

A good investment is one that balances growth with protection. It’s about understanding the client’s personal goals, risk appetite, and life circumstances – not just chasing returns. In today’s environment,

diversification, protection and a longterm view are essential.

What expectations do you have for 2026?

I want to continue growing both personally and professionally, expanding my impact while staying true to the principles that guide me: service, relationships and building holistic, generational impact. I aim to inspire more advisers under my mentorship and continue helping clients realise their dreams.

What advice would you give to other advisers?

Build trust with your clients before rushing to make money, and the rest will fall into place. Follow your passion, commit fully to the people you serve, and focus on making a difference. Put relationships first, listen more than you speak, and success will follow.

What are some of the best books on finance/investing you have read, and why would you recommend them?

Some of the best books I’ve read on finance and investing are the ones that combine practical guidance with a bigger purpose. I start my day early, reading to sharpen my mind and perspective. My favourite author is Robin Sharma, who teaches discipline, mindset, and leadership qualities every adviser and investor needs. In terms of practical business and financial insight, I highly recommend Doing Business with Purpose by François van Niekerk. It’s a guide on aligning strategy with meaningful impact, which I think is critical in finance: it’s not just about money, it’s about building and protecting dreams. These books have shaped the way I approach both my personal investments and how I serve my clients.

1nvest’s SALTA-nominated ETFs set themselves apart in the market

Voting is now open for the People’s Choice Awards for the South African Listed Tracker Funds Awards (SALTA). We spoke to 1nvest about why their ETFs – including the 1nvest Top 40 ETF, nominated in the Local Fund category, and the 1nvest S&P500 Info Tech ETF –stand out for investors.

What makes the ETF 1nvest Top 40 portfolio a strong contender in the Local Fund category at the SALTA Awards?

The 1nvest Top 40 ETF offers investors low-cost, transparent access to South Africa’s bestperforming large-cap equity segment, at a time when local equities have delivered standout results. In 2025, the FTSE/JSE Top 40 Index returned roughly 49%, making South African equities one of the strongest-performing markets in rand terms. This was driven by a powerful rebound for resources, improving domestic sentiment, and renewed foreign investor interest in SA assets.

The JSE’s resurgence was significant, adding nearly R5tn in market value, while the Top 40 outperformed the MSCI Emerging Markets Index by around 30 percentage points during the year. Against this backdrop, the 1nvest Top 40 ETF has proven itself as a core portfolio building block, capturing market-leading performance through disciplined index tracking, while maintaining a competitive fee structure.

Can you explain how the 1nvest Top 40 portfolio gives exposure to the largest JSE-listed companies? We provide investors with direct exposure to the 40 largest companies listed on the Johannesburg Stock Exchange, as measured by market capitalisation. By tracking the FTSE/ JSE Top 40 Index, the fund offers a simple way to invest in South Africa’s biggest and most liquid stocks, including leading names such as Naspers, Standard Bank, Anglo American, and Gold Fields. This allows investors to gain broad large-cap equity exposure through a single, cost-effective investment, without needing to select individual shares.

What factors contributed to the 1nvest S&P500 Info Tech Index Feeder achieving 41.53% returns in 2024?

The 1nvest S&P500 Info Tech Index Feeder ETF benefited from a strong rally in global technology stocks, driven by accelerating investment in artificial intelligence, cloud computing and semiconductor demand. The fund tracks the S&P 500 Capped 35/20 Information Technology Index, which includes major global leaders such as Microsoft, Apple, and NVIDIA. These companies delivered exceptional earnings growth and market momentum during the year, supporting the ETF’s strong performance. As a feeder fund, it closely captured these offshore sector gains through its underlying US technology exposure.

How does the S&P500 Info Tech Index Feeder ETF fit into a diversified investment strategy?

This ETF provides South African investors with targeted offshore exposure to global technology leaders, offering diversification beyond the JSE’s traditional sector mix. It can serve as a growthfocused allocation alongside broader local equity holdings, helping investors diversify across:

Geography (US exposure)

Currency (US dollar earnings)

Sector (technology and innovation).

• It is particularly suited to long-term investors seeking global growth themes.

Are there any specific risks investors should consider before investing in these funds?

Yes. Key risks include:

• Equity market volatility, as both funds can decline during downturns

• Concentration risk, with the Top 40 focused on SA large caps and the Info Tech ETF concentrated in one sector

Currency risk, as offshore returns are influenced by rand-dollar movements

• Sector risk, since technology stocks can experience sharp cycles

Investors should align exposure with their risk tolerance and time horizon.

EARN YOUR CPD POINTS

What impact would winning a SALTA People’s Choice Award have for 1nvest and its investors?

Winning a SALTA People’s Choice Award would reinforce 1nvest’s reputation as a trusted provider of cost-effective index solutions. For investors, it serves as an independent signal of confidence and recognition, highlighting the growing role of ETFs as accessible core portfolio tools in South Africa’s investment landscape. It would also increase visibility and support broader adoption of index investing locally.

How can interested parties cast their vote for 1nvest in the SALTA People’s Choice Awards?

Cast your vote by going to www.salta-awards. co.za/peoples_choice and then clicking on your favourite ETF in the local and global categories. Voting is open during the awards period and provides an opportunity for investors to support the ETF providers and products they value most. Voting closes at midnight on 13 March 2026.

2026 SALTA AWARDS

The 2026 Annual SALTA Awards event will be held at the JSE, Sandton, on 24 March 2026 at 18:00.

The FPI recognises the quality of the content of MoneyMarketing’s March 2026 issue and would like to reward its professional members with 2 verifiable CPD points/hours for reading the publication and gaining knowledge on relevant topics. For more information, visit our website at www.moneymarketing.co.za

By Cheree Dyers CEO, Prescient Investment Management

IGive to Gain: The most strategic investment we can make

n investment management, we understand compounding. Small, disciplined inputs applied consistently over time create exponential outcomes. We rely on this principle when allocating capital, constructing portfolios and managing risk. Yet too few institutions apply the same logic to leadership. This International Women’s Day, on 8 March, under the theme ‘Give to Gain’, the most powerful compounding force in our industry is not capital, data infrastructure or artificial intelligence. It is mentorship.

In markets, capital compounds. In institutions, mentorship compounds.

We optimise portfolios with precision. We deploy technology at scale. We interrogate risk relentlessly. But leadership capability is often left to evolve organically.

High-performing institutions know that is insufficient.

Leadership depth is built through access

The World Economic Forum estimates that global gender parity remains decades away at the current pace. Research from McKinsey & Company continues to show that representation narrows as roles approach capital allocation and executive decision-making.

The institutions that outperform long term understand a simple principle:

Leadership capability scales with exposure. Judgment develops through responsibility. Conviction strengthens through participation in consequential decisions. Influence grows through proximity to strategy.

In our industry, you learn to allocate capital by sitting alongside those who do it. You learn to navigate volatility by engaging directly in risk conversations. You develop executive presence by contributing in highstakes forums. Access accelerates capability. Mentorship formalises that access.

When exposure is structured, sponsored and measured, leadership pipelines strengthen. When development is passive, progression slows. This is not a social observation. It is operational discipline.

In an AI-driven world, human depth differentiates Artificial intelligence is reshaping markets at extraordinary speed. At Prescient, we process hundreds of millions of

data points daily. The efficiency gains are material. But automation increases the premium on judgment.

The World Economic Forum ranks analytical thinking, leadership and social influence among the fastest-growing capabilities globally. Algorithms optimise portfolios. They do not exercise moral courage during volatility. They do not synthesise ambiguity in boardrooms. They do not build trust across teams. As technology accelerates, competitive advantage will increasingly belong to firms with deeper leaders – those capable of integrating data with discernment, conviction with humility, and strategy with execution. Depth does not emerge by tenure alone. It scales with deliberate development. Mentorship remains one of the most effective accelerators of that depth.

Grow Boldly – Development by design

At Prescient Investment Management, mentorship is treated as a performance driver.

Our Women’s Mentorship Initiative – led by the women of Prescient and anchored at executive level –operates this year under a clear mandate: Grow Boldly. We convene structured roundtables where senior leaders, both men and women, invest time in rigorous dialogue on executive presence, feedback discipline, psychological safety and leadership capability. The objective is acceleration: strengthening influence, sharpening decision-making, and building confidence to contribute beyond formal role definitions.

The outcomes are measurable. Women represent 46% of our investment team and 67% of our executive committee. Half of our Exco are Black women. These results reflect sustained, intentional leadership development. Leadership diversity is not a slogan. It is a management outcome. When capability is mentored deliberately, it multiplies across teams, decisions and, ultimately, performance.

Investing earlier strengthens markets later

Leadership responsibility extends beyond institutional boundaries. The Prescient Foundation channels our commitment to education and social upliftment, grounded in the belief that education transforms

economic participation. Since inception, it has reached more than 11 600 direct beneficiaries, supported scholarship programmes, funded teachers in underresourced schools, launched financial literacy initiatives such as Project R1, and mobilised significant staff volunteer hours annually in financial literacy. In a country where youth unemployment remains high, equipping young people with the tools to manage money, delay gratification and understand risk is foundational.

Strategy, not sentiment

‘Inclusion’ is often framed as a moral argument. It is more accurately an economic one. When senior leaders invest time, access and belief in emerging professionals:

• Institutions gain resilience through knowledge transfer

• Capital allocation benefits from broader perspective and fewer blind spots

• Culture gains continuity and adaptabilityPerformance strengthens over time. The evidence linking diverse executive teams to superior outcomes is well established. But in any system, inputs determine returns. Mentorship is a high-return input. It belongs alongside capital allocation, risk management and technology investment.

A leadership test

For those who hold influence, in markets, in boardrooms or in capital allocation, the question is straightforward:

• Who are you deliberately developing?

• Whose proximity to consequential decisions are you increasing?

• Whose potential are you backing before it becomes obvious?

In a world accelerating through technological change, the most durable competitive advantage is human depth. Leadership, like capital, compounds. The time, access and belief invested in emerging talent expand across teams, across decisions, and across performance. In markets, capital compounds. In institutions, mentorship compounds. That is not sentiment; it is strategy. And it is the most strategic investment any leader can make.

Highlighting Disciplined Performance in Investment Management

Congratulations to all the 2026 winners.

To see the winners, go to: https://www.plexcrown.co.za/ROTB/awards.aspx

in partnership with

By John Gilchrist CIO at PSG Asset Management

Exceptional risk-adjusted long-term returns start with careful stock selection

Following three years of strong global equity performance, a key question for investors is whether markets will continue to power ahead in 2026. With distinctly different outcomes possible, sitting on the sidelines is not a viable option, but ideally investors need to construct portfolios that can deliver appropriate client outcomes even in challenging market environments.

At PSG Asset Management, we believe that the best investment opportunities are usually found in uncrowded areas that have been neglected by the rest of the market. These outof-favour areas generally offer fertile hunting grounds for mispriced investment opportunities. However, to achieve long-term investment success, these mispriced assets need to possess an inherent quality that the market is overlooking. This may be due to, for example, the market having an excessive focus on shortterm addressable issues; focusing on risks fully captured in the asset price; or mis-assessing the evolving supply-demand dynamics.

We firmly believe that the price paid for an asset is a key determinant of both the returns generated from that asset over time, and the risk associated with investing in that asset. Thus, our approach tilts the odds of earning exceptional risk-adjusted returns over the long term in our clients’ favour.

We pride ourselves on our independent and in-depth research, which helps us to find these opportunities wherever they may reside. Our investment decisions are driven by the attractiveness of the individual investments, not by their index weight or by a rigid strategic asset allocation framework. As a result, our

portfolios can often look different to those of most of our competitors, offering our clients valuable diversification benefits as part of a blended portfolio.

Out-of-favour stocks can deliver returns that rival those of the market darlings

While the artificial intelligence (AI) rally has undoubtedly captured the public imagination, what is less well telegraphed is that other select stocks have delivered returns that outshine even those of the AI leaders. From January 2023 to December 2025 (a period that captures the AI frenzy), Mag7 shares delivered an incredible price return of 329%. Over the same period, Babcock International plc delivered 393%, while AngloGold Ashanti rose 347% (both in US dollars).

In 2025, the Mag7 gained a relatively muted 23%, while we held numerous shares that increased between 100% and 355% in US dollars. Fear of missing out (FOMO) can cause investors to forget that less popular alternatives can frequently outperform market darlings. Our investment process excels at finding opportunities such as these.

Case study: Telkom

Telkom is a classic example of our investment approach in practice. When we initiated our investment, the inherent quality was obscured by the market’s focus on historically poor management and capital allocation decisions. The business appeared to be in structural decline with the legacy copper business going backwards and the business generating low levels of free cashflow. Our research identified substantial hidden value in the form of a leading fibre asset (Openserve) and a very competitive and well-run mobile asset (Telkom

Mobile) that was rapidly taking share from the large incumbents through a low-cost data-led strategy. The company had spent almost three times its market capitalisation on investing in these fibre and mobile businesses over the prior decade.

However, the declining legacy copper business was obscuring the value of the growing businesses. We initiated an investment, buying at share prices in the R25 to R30 per share range in 2023 and 2024. After about a year, the first signs of inflection became visible as the growth from the new businesses started to more than offset the drag of the legacy assets (which were declining in the revenue mix). The market was positively surprised by the return to growth, higher margins, and dramatically improved free cashflow, resulting in a material rerating of the share to its current level of over R60 per share.

Case study: Platinum producers

Gold and resources were the story of 2025, with gold rallying 64.5% and platinum 127%. We have written extensively about our investment theses on these sectors (including their role within differentiated portfolios) since we moved to meaningful exposures in 2023/24.

Platinum group metal (PGM) prices were depressed for several years, primarily due to an expected decline in demand, which was based on significant electric vehicle adoption forecasts (that we viewed as optimistic).

South Africa supplies 70%-80% of the world’s platinum, and the supply side of this industry is highly forecastable due to high depletion rates, known capex, and long timeframes between investments and production. When future supply is expected to be below conservative future demand estimates, the outlook for prices is excellent but timing is unclear, and patience and a longer-term perspective are required. In periods of strong underlying commodity price performance, platinum mining companies provide geared exposure to the PGM basket price.

Look

beyond the obvious areas

After several years of excellent stock market returns, investors have valid concerns whether current trends can continue, especially given high valuations for the popular AI-focused stocks, high levels of index concentration, and a challenging geopolitical situation. In such an environment, investors would do well to consider investments outside the popular winners of the recent past, diversifying their portfolios into investment positions that can perform in many different market environments.

Growthpoint redevelops Paarl Mall

Across its retail portfolio, Growthpoint is pursuing a strategy focused on refurbishments, optimised tenant mixes, energy-efficient operations and disciplined capital allocation – all aligned with its overarching goal of enhancing portfolio quality and delivering sustainable, long-term value for stakeholders.

The latest is a major redevelopment of its high-performing Paarl Mall in the Western Cape as part of its ongoing asset management strategy to enhance core retail assets across its South African portfolio. The R270m project will expand Paarl Mall’s gross lettable area to 44 474m² and introduce significant internal reconfigurations and design updates throughout the mall.

“Paarl Mall’s upgrade is part of a deliberate strategy to optimise its retail mix and elevate the shopper experience,” says Gavin Jones, Growthpoint Properties Head of Asset Management: Retail. “It ensures the mall remains positioned to meet the evolving needs of its growing customer base.”

As a small regional centre with high trading densities, low vacancies and strong tenant demand, Paarl Mall is among several high-performing assets targeted for investment to strengthen Growthpoint’s core retail portfolio.

“We’re concentrating capital on centres that lead their catchments, offer sustainable rental growth and can adapt to changing consumer and retailer dynamics. Paarl Mall fits this profile, being well located at the heart of a thriving community,” explains Jones.

Opened in 2005, Paarl Mall is deeply embedded in its community and will mark its 21st anniversary with this redevelopment. Strategically positioned alongside the N1 highway, it is the leading retail destination locally, with shopper loyalty reflected in weekly visits from over half its customer base. The mall consistently maintains vacancies below 1% and delivers above-average trading densities.

The catchment area is experiencing rapid residential growth, with over 4 300 new housing units planned or under construction, strengthening longterm retail fundamentals. “Our research points to rising demand for fashion, fast-food choices and Wi-Fi. Our redevelopment addresses these priorities,” says Jones.

By restructuring large-format space, the mall will accommodate a bigger range of retailers, including a sought-after international fashion brand. New store openings include Cielo and Wordsworth, while existing retailers such as Truworths, Foschini, @home, Sportscene and Identity will expand or introduce new concepts. The mall will also feature a larger restaurant and fast-food selection, and a revamped family food court.

The redevelopment introduces a new main entrance, improved internal flows, and a central fashion court. Interiors will feature refreshed finishes, tiling, lighting, upgraded amenities and modernised bathrooms. Upgraded behind-the-scenes infrastructure will improve energy efficiency and provide mall-wide free Wi-Fi.

Paarl Mall already features a hybrid electricity solution combining solar, battery, generator and grid power, generating around 3,500 MWh annually and charging a Battery Energy Storage System. Integration with the generator farm enhances backup capability, reduces carbon emissions, and meets the Drakenstein Municipality’s 45% load factor requirement. The solar PV system is registered for Renewable Energy Certificates, supporting Growthpoint’s decarbonisation strategy.

“These changes create a more enjoyable, varied and seamless shopping environment while preserving the character that resonates with loyal shoppers,” notes Wouter de Vos, Growthpoint’s Regional Head: Western Cape. The redevelopment will create employment opportunities, prioritising local contractors and sourcing materials locally. “Our focus is on retail environments where customers stay longer, retailers trade better, communities are proud, and investors gain resilient, higher returns,” Jones adds. Construction began in mid-January, with completion scheduled for November 2026, ahead of the peak holiday season, with the mall remaining open and disruptions minimised.

Kevin Brady, CEO of A2X Markets

Heartwood Properties lists on A2X markets

Heartwood Properties Limited has been approved for a secondary listing on A2X. Heartwood is currently listed on the Cape Town Stock Exchange (CTSE) and will retain its primary listing there. Heartwood’s shares commenced trading on A2X on Monday 2 February 2026. The secondary listing provides Heartwood shareholders with more choice. By listing on A2X, the company is now able to provide access to both the retail market through the Cape Town Stock Exchange and the institutional market through A2X.

A2X is South Africa’s licensed stock exchange, focused on increasing competition in the equity market through efficient, transparent and cost-effective secondary trading. The introduction of competition between trading venues is widely recognised in mature markets globally as improving market quality and execution outcomes for investors.

“Heartwood’s listing reflects the growing demand among issuers for competitive market structures that deliver tangible benefits”

Kevin Brady, CEO of A2X Markets, says, “We are pleased to welcome Heartwood Properties to A2X. Secondary listings play an important role in improving investor outcomes by increasing choice, enhancing liquidity and supporting more efficient price discovery. Heartwood’s listing reflects the growing demand among issuers for competitive market structures that deliver tangible benefits to shareholders.”

Heartwood is a commercial and industrial property investment and development company with a portfolio concentrated primarily in the Western Cape. The company’s decision to list on A2X forms part of its ongoing focus on enhancing shareholder value and broadening market access.

John Whall, CEO of Heartwood Properties, comments on the listing, “Listing on A2X provides Heartwood shareholders with an additional venue on which to trade our shares, supporting liquidity and accessibility. As we continue to grow and invest in high-quality commercial and industrial assets, this secondary listing aligns with our commitment to transparency, efficiency and long-term value creation.”

A2X now supports trading in a growing number of securities across multiple sectors, providing issuers with an efficient secondary market and investors with improved execution and reduced transaction costs.

By Ntobeko Nyawo Chief Financial Officer at Redefine Properties

SA’s constructive path to investment-grade rerating is listed property positive

Listed property has always been shaped by market cycles, structural constraints and the discipline required to manage capital through periods of uncertainty. From a balance sheet and portfolio perspective, the question is seldom whether risk exists, but how clearly it can be understood, priced and managed over time.

What is changing is not the presence of these pressures, but the degree of visibility around them. Listed property operates within a complex and evolving economic environment, shaped by both macro conditions and portfolio-level realities. Alongside economic signals, outcomes are increasingly influenced by how effectively assets are operated. This includes how operating costs and infrastructure risks are mitigated at asset level, and how balance sheets are structured through periods of constraint within the broader confines of a well-crafted capital allocation strategy.

In recent years, developments in areas such as energy reform, operational resilience and financial discipline have changed how these factors interact with performance. Considerations that were once treated as largely external inputs now play a more direct role in shaping margins, reliability and flexibility. This has implications for how risk and opportunity are interpreted across the sector, particularly by investors assessing relative resilience rather than directional growth.

Interpreting the moment

Importantly, this does not alter the structural challenges facing the economy, nor does it eliminate risk. What it does change is how those risks are experienced and assessed within property portfolios and balance sheets. As macro conditions become more clearly defined, their interaction with operational resilience and capital positioning becomes more apparent. Several macro lead indicators are beginning to provide greater clarity. Inflation has been anchored at 3%, with a 1% tolerance band, interest rates are below long-term averages, and progress on structural reform is increasingly visible through formal scorecards. South Africa’s removal from the Financial Action Task Force (FATF) grey list is expected to boost capital flows and further drive business confidence. These developments are constructive, not because they imply accelerated growth, but because they improve the predictability of key economic variables. For capital-intensive sectors such as property, predictability matters as much as direction. In this constructive context, traditional macro

fundamentals can be read alongside a broader set of asset-level considerations, including execution and discipline, rather than being treated as overriding determinants of outcome.

Energy and operational resilience as fundamentals

Energy availability has become a defining operational variable for property portfolios in South Africa. Where electricity supply was once treated as an assumed external input, regulatory reform has shifted it into the realm of asset-level decision-making. The liberalisation of electricity generation has enabled property owners to invest in on-site renewable capacity, changing both cost exposure and operational reliability.

This shift has practical implications. Energy now influences asset uptime, tenant continuity and margin stability, rather than sitting solely as an operating expense. Portfolios able to mitigate reliance on the national grid are better positioned to manage disruption and cost volatility, while those without such measures remain more exposed to systemic constraints.

This does not remove energy risk. Grid capacity and broader infrastructure limitations remain relevant. However, the ability to generate a portion of required power on-site has altered how energy risk is experienced at asset level, introducing a degree of control where previously there was none.

We have observed this shift within our portfolio, where sustained investment in energy resilience and financial discipline has supported more consistent asset operations and cost management over time. Similar principles increasingly apply to other infrastructure dependencies, including water security, where asset-level planning is becoming more material.

More broadly, this reflects how property fundamentals are evolving. As infrastructure risks become more asset-specific rather than uniformly systemic, differences in execution and investment approach become more visible. In this context, resilience is shaped less by the absence of constraint than by how operational dependencies are anticipated and mitigated over time.

Funding structure and optionality

Financial structure plays an increasingly important role in shaping how the asset class operates within the current environment. Given the long-term and leveraged nature of listed property, the cost, availability and flexibility of finance influence both risk management and decision-making over time.

Recent macro conditions have begun to stabilise key variables that affect financing. Inflation expectations have moderated and interest rates remain below long-term averages, improving visibility around borrowing costs

even as uncertainty persists. This does not guarantee further easing, but it reduces some of the volatility that has complicated long-term planning in recent years.

As a result, differences in financial flexibility are becoming more apparent, a point increasingly noted in industry commentary on South Africa’s REIT sector. Portfolios with diversified sources of finance, appropriate debt maturities, and sufficient liquidity are better placed to manage variability and act selectively, while more constrained balance sheet structures face narrower options, regardless of broader economic signals.

There are also early indications that the composition of investment participation in property markets may evolve. Proposed regulatory developments around unlisted REIT structures could, over time, broaden institutional participation, particularly from long-term and short-term insurers. While still subject to regulatory process, this suggests a potentially more flexible funding landscape that could add greater dynamism to South African listed property’s market conditions.

“South Africa’s listed property sector is entering a phase that is more interpretable than in recent years”

What this means for the sector

Taken together, recent developments across macroeconomic conditions, operations and capital structure suggest that South Africa’s listed property sector is entering a phase that is more interpretable than in recent years, even as structural challenges remain.

Fundamentals are becoming more constructive not because constraints have disappeared, but because their implications are clearer and, in some cases, more actively managed.

For investors and stakeholders, this places greater emphasis on how portfolios translate external conditions into execution. Asset reliability, operating resilience and balance sheet positioning increasingly shape how risk and opportunity manifest over time, alongside traditional macro indicators.

This moment does not call for a reset in expectations, but for a more informed reading of the fundamentals. In a sector defined by long-term horizons, leverage and complexity, the ability to interpret risk with greater clarity and to act with discipline through market cycles is itself a source of resilience.

The value of multifamily rental housing investing

Multifamily residential rental property continues to demonstrate its strength as one of South Africa’s most resilient and compelling real estate investment opportunities, underpinned by stable demand, improving economic fundamentals and growing institutional participation.

These insights were shared at a recent South African Multifamily Residential Rental Association (SAMRRA) multifamily sector institutional capital breakfast in partnership with Absa.

SAMRRA is the industry body representing institutional owners and stakeholders in purpose-built residential rental housing in South Africa, with a mandate to grow the asset class through data, research and sector collaboration. Its members represent an estimated R40bn in assets nationwide, comprising around 75 000 housing units.

Further positive data was presented by Kobus Lamprecht, Chief Economist at Rode Publications & Media, who outlined improving macroeconomic conditions and their impact on property markets. He pointed to easing power supply constraints, improving sentiment from ratings agencies, stronger commodity prices and a firmer rand as factors supporting property fundamentals.

Lamprecht also shared early findings from the ongoing Rode and SAMRRA collaboration, which is tracking the performance of members’ multifamily portfolios on a quarterly basis, starting in August 2025. The survey currently covers around 60 000 residential units, making it the most comprehensive dataset available for the multifamily sector. Two thirds are in suburban areas and one third in CBDs. The portfolios are predominantly Grade A, purpose-built rental assets, owned and managed by institutional investors.

Vacancy rates across SAMRRA members’ portfolios have remained stable and are lower than those of non-SAMRRA apartments.

SAMRRA’s occupancies remained above 95% for the three quarters tracked, reflecting the impact of more modern stock, dedicated amenities and professional management at scale. Location influenced vacancy outcomes, with variations evident between CBD-based and suburban developments, which show slightly lower vacancy levels.

Nationally, apartment rental growth averaged 3.6% in 2025, close to consumer inflation, with the decline in interest rate constraining rental growth. However, the same interest rate environment is supporting capital values, contributing to overall market stability.

The Western Cape continues to outperform, with rental growth outstripping inflation. Rental apartment vacancy rates in the province are consistently low across both SAMRRA-managed and non-SAMRRAmanaged stock. Lamprecht said the Western Cape is still a small multifamily housing market in the SAMRRA sample compared to Gauteng but is expected to grow.

Increasing in significance for real estate investors

Somaya Joshua, Managing Executive: Real Estate at Absa CIB, noted the asset class’s defensiveness and strategic importance.

“Multifamily rental housing is becoming one of the most resilient, investable and socially impactful asset classes in South Africa. It aligns with national priorities such as urbanisation, affordability, and inclusive growth – and Absa remains committed to backing this sector across economic cycles,” said Joshua.

Joshua added that multifamily rental housing is increasingly becoming an important component of Absa’s real estate portfolio, reflecting the bank’s through-the-cycle confidence and long-term strategic alignment.

Opportunity at scale

From an investor perspective, Kamogelo Leeuw of the Sanlam Investments Property Impact Fund highlighted the scale of opportunity underpinning the sector. Sanlam has identified a housing shortfall of approximately 3.7 million units within the ‘missing middle’ market alone, while delivery rates of low-cost housing have declined

sharply in recent years. The missing middle, defined as households earning between R5 750 and R36 000 per month, represents up to 30% of South African households and more than 60% of the country’s tax base. “Multifamily rental housing provides a scalable, repeatable model that links stable, needs-based demand with long-term institutional capital. It can act as an anchor asset within integrated precincts, support inner city regeneration and densification, and create pathways for long-term household wealth creation,” Leeuw said.

Palesa Mkhize, CEO of SAMRRA, noted that the organisation was established to help institutional investors better understand and engage with multifamily residential as an investable asset class. “While some investors have been active in this space for decades, for others it is still relatively new. What is clear is that multifamily rental housing is growing rapidly and is increasingly recognised as a core component of South Africa’s real estate landscape. Credible, consistent data is essential to support informed investment decisions as the sector continues to mature,” said Mkhize.

SAMRRA’s collaboration with Rode aims to address data gaps in the South African multifamily rental housing market. Mkhize concluded, “The research we are developing with Rode is still in its early stages, but it already demonstrates the strength and resilience of professionally managed portfolios. We look forward to expanding this data set further and continuing to support investors, lenders and developers as this asset class grows.”

OUR 220 MILLION SHOPPER VISITS A YEAR CREATE SUSTAINABLE GROWTH AND SUPERIOR VALUE .

This is Lebo J, aged 19. He shops twice a month, usually at weekends. He arrives at our mall in the mid-afternoon when it’s really buzzing. Many of his friends are there too.

On average, after 2.3 hours of shopping and browsing, Lebo leaves from the east wing and takes a taxi home to his family, a drive of around 40 minutes.

Lebo’s mother will ask him about the discounts and special offers he spotted as he ambled around both floors of the centre. This helps her to plan her weekly grocery shop, which she does before lunch on Mondays.

We know all this and more about Lebo J and our other visitors too. Our multi-faceted consumer behaviour research, combined with our deep understanding of the needs and desires of the communities we serve, leads us every step of the way.

Our unique focus on a superior customer experience ultimately benefits all our key stakeholders: customers, tenants and investors.

As a Vukile stakeholder, you too will benefit from our extensive analysis of shopper behaviour and the factors that drive continuously evolving retail trends.

There has never been a better time to invest in people like Lebo J.

BUILDING COMMUNITIES, GROWING VALUE.

By Francois du Toit CFP® PROpulsion

AYou can’t outsource accountability to an algorithm

client sits across from you. You have used an AI tool to analyse their portfolio, flag a gap in their life cover, and draft a recommendation. The output looks thorough. The numbers add up. You present the advice with confidence. Six months later, the recommendation is challenged. The FAIS Ombud asks one question: Can you explain the rationale behind it?

If your answer is “The software said so”, you are in serious trouble. AI tools are genuinely useful. They save time, reduce errors, and process far more data than any human analyst. But they do not carry professional responsibility. You do. That distinction matters more than any feature on a product demo.

Diagnose what fiduciary duty requires Fiduciary duty rests on two foundations: care and loyalty. The duty of care requires you to give advice that is genuinely in your client’s best interest, based on a thorough understanding of their circumstances. The duty of loyalty requires you to put their interests first and to eliminate or disclose any conflicts. Neither duty changes because you used a piece of software. The Financial Advisory and Intermediary Services (FAIS) Act is explicit on this point. Licensed financial services providers must act with honesty, integrity, and transparency, and clients must receive appropriate solutions based on proper affordability and suitability assessments. An algorithm contributing to that assessment does not transfer the obligation to the algorithm.

The FAIS Ombud has reinforced this consistently. In Pienaar v. Introvest 2000 CC, an FSP was held personally liable because the advice was not factually correct, adequate or appropriate because they failed to disclose a conflict of interest. In Ralph v. Efficient Insure

Advisory Services, the Ombud overturned a rejected claim because the FSP could not prove a critical communication had been received and understood. Good intent is not enough. You need a paper trail that shows exactly what happened, why, and when.

Section 71 of the Protection of Personal Information Act (POPIA) adds a further requirement: decisions with legal or substantial effect cannot be made solely by automated processing unless the client is given sufficient information about the underlying logic. Every automated output must be explainable. “The AI recommended it” does not meet that standard.

Decide where your process must hold firm Here is where good processes go to die: advisers adopt a tool, trust its outputs, and skip the review step. The verification step never gets built. To keep your process defensible, three checkpoints are non-negotiable.

First, verify every material output before it informs a client recommendation. AI tools can produce plausible but incorrect information, a phenomenon known as hallucination. According to research from Jones Walker LLP, more than 300 cases of AI-driven errors were documented in professional advice contexts by mid-2023, leading to sanctions and reputational damage for practitioners who trusted machine outputs over their own judgement. A human review step is not optional.

Second, check for algorithmic conflicts. An AI system may favour certain products because of how it was trained, not because those products suit your client. According to guidance from AIMA, advisers should regularly review AI outputs to confirm they reflect client interests rather than platform or firm preferences, and disclose how AI is being used in the advice process.

Third, document your reasoning in plain language. A system log is not enough. You need a clear, step-by-step account of why a specific recommendation was made for a specific client, in your own words.

Do the work to keep the client central Client-centred advice means the client’s circumstances drive every decision. AI can process information faster, but it cannot replace the judgement, empathy, and context that give that information meaning.

Clients accept automation for administrative tasks such as risk profiling and account aggregation. They want a human present for the moments that matter: life planning, major transitions, and staying the course when markets move. According to research published by Vanguard, the adviser’s competitive edge is shifting toward behavioural coaching and emotional intelligence. That is where your irreplaceable value lives.

Before introducing AI into any client workflow, ask a direct question: does this make the advice more appropriate for this person, or does it just make my process faster? Both outcomes can coexist, but the first must come first. Record every significant decision point. Note what information you used, what the AI contributed, what you verified, and what professional judgement you applied. This is not bureaucracy. It is evidence that you acted as a fiduciary.

You remain accountable for every recommendation that leaves your practice. Technology has not changed that. It has only made it easier to see when you have fallen short.

Stay curious!

Fiduciary duty and the rise of umbrella trusts

By Sandy Welch Editor, MoneyMarketing

For financial advisers navigating the complexities of trust structures in South Africa, the concept of fiduciary duty has never been more critical. Over the past decade, umbrella trusts have emerged as a flexible, cost-effective solution for managing beneficiary assets, particularly for clients with smaller trust portfolios or for non-employee benefits.

David Hurford, CEO of Fairheads, has been at the forefront of this change. “We started as one of South Africa’s first trust companies back in 1925, primarily serving high-net-worth clients. It wasn’t until the 1980s that we ventured into the umbrella trust space,” he explains. “Alexander Forbes approached us with a challenge: death benefits from retirement funds were scattered across multiple accounts, and a more efficient solution was required. That’s how the umbrella trust concept took off.”

Lessons from the past

Despite early growth, the market faced setbacks in the 2000s, notably with the Fidencia scandal, which highlighted the risks of inadequate oversight. This led to the creation of beneficiary funds, regulated under the Pension Funds Act, which introduced stricter fiduciary oversight. Hurford notes that by 2019, the umbrella trust concept saw a resurgence, extending beyond employee benefits into the retail space, providing a practical structure for individuals with relatively simple trust needs.

Fiduciary duty, Hurford emphasises, is more than a legal requirement. It’s a commitment to providing the right level of care for beneficiaries. “We had a case where a family trust was poorly administered by a local attorney. The money was sitting idle in a money market account, and the trustees lacked the experience to manage it effectively. By transferring the assets into an umbrella trust, we could ensure professional oversight, compliance, and ongoing management, fulfilling our duty to the beneficiaries.”

Real-life solutions for complex situations

Umbrella trusts don’t just provide structure, they actively solve real-life problems for beneficiaries, particularly in urgent or complex circumstances. Hurford explains: “We had an individual who suffered a motorbike accident. The insurance company couldn’t pay

the benefit directly to the nominee because he was in a coma. By placing the funds into an umbrella trust with the nominee as beneficiary, we could immediately distribute money to cover medical bills and related costs.”

Administration is central to the fiduciary duty umbrella trusts require. Hurford continues: “We work closely with caregivers or guardians to ensure funds are used appropriately. For example, school fees are paid directly to the institution, nursing home fees are settled monthly, and we even provide educational allowances upfront for trusted guardians. This approach balances oversight with flexibility, ensuring beneficiaries’ needs are met efficiently and responsibly.”

The ethos at Fairheads, Hurford says, is partnership rather than paternalism. “Our role is to act in the best interests of the beneficiary, but we also partner with families to educate and guide them. We advise on the implications of drawing down capital early and the impact on long-term benefits. Trustees aren’t there to say yes or no arbitrarily; they’re there to ensure the right decisions are made, consistently and transparently.”

The importance of independence

Independence is central to how the company manages trusts and beneficiary funds. “We’ve always maintained a strict separation from the investment process,” explains Hurford. “This allows us to conduct thorough due diligence and select best-of-breed managers without any conflict of interest.”

All investments under their administration, ranging from Allan Gray and Coronation to Prescient and Fairtree, are managed at arm’s length. Hurford points out that many of the industry’s largest failures, particularly in beneficiary funds and trusts, can be traced back to a lack of independence between trustees and investment managers. By keeping these roles separate, Fairheads ensures robust governance and mitigates risks to beneficiaries’ assets.

Expanding access to wealth planning

Umbrella trusts are also opening doors for individuals who have traditionally been excluded from wealth- and retirementplanning solutions, such as domestic workers. Hurford recalls a conversation with a large, well-known financial planning firm in which it was highlighted that many clients wanted to make meaningful retirement provision for their domestic staff but found conventional retirement annuities too rigid. “We explored the idea of setting up a trust in the domestic worker’s name, with monthly contributions invested over time,” Hurford explains. “At retirement age, the trust can convert from accumulating contributions to paying an income, effectively functioning like an annuity. But the key advantage is flexibility: if a medical emergency arises before the retirement age, the trustees can authorise capital to be used for the domestic worker’s benefit. It’s a simple, cost-effective solution that provides protection, investment growth, and real-world flexibility – something an ordinary annuity simply can’t offer.”

Yet the wider market still faces a knowledge gap. “Many advisers aren’t fully aware of umbrella trusts or their benefits. Sometimes remuneration incentives skew advice toward annuities instead. Education is key. We’ve seen insurers and online will providers starting to use umbrella trusts as backend solutions, which is promising for growth and awareness.”

“Administration is central to the fiduciary duty umbrella trusts require”

Hurford concludes: “Umbrella trusts offer peace of mind. For relatively simple setups, where the goal is protecting and distributing money responsibly, they’re ideal. If clients require bespoke arrangements, standalone trusts may be appropriate, but at a higher cost. For most families, an umbrella trust combines efficiency, compliance, and fiduciary care.”

Closing the wealth management loop

By Sarah Love CFP®

FPSA® TEP

Private Client Trust (the fiduciary pillar of Private Client Holdings)

The average person wants to enjoy life while they are working and building their wealth, then have enough savings to live on and maintain their lifestyle when they are no longer working, plus make sure that a spouse and any dependants are financially taken care of when they pass away. Achieving these objectives takes careful planning and a disciplined strategy. This is where a trusted wealth manager can play a role, someone who will look at your entire financial picture and create strategies that ensure you can achieve your short- and long-term financial goals. Done well, wealth management can reduce your stress about money, support your current financial needs and help you build a nest egg for goals such as retirement.

Wealth managers are often required to delicately balance the short- and longterm needs of their clients to achieve these objectives and have calculated answers at the ready to respond to questions, such as:

How much can I spend now?

• How much should I be saving to meet my long-term goals?

• How much risk can I afford to take with my current capital?

How can I do all of this in the most taxefficient manner?

Wealth managers owe their clients the best possible structuring and guidance for their lifetimes, but also the best possible outcomes if their lifetimes are shorter than expected. I work with wealth managers to make sure the financial planning loop is closed, and offer advice and guidance on estate planning, ensuring a legal and watertight will is in place, and that dependants have access to funds should a provider die.

I start my fiduciary role by establishing if a client has any legal obligations. Do they have a spouse or minor children or any other financial dependants, such as parents, that they are legally obliged to provide for? What is their relationship with

money? Some people are big spenders, while others are prudent. Some believe you must leave a legacy for your children; others think that their job is done once children become adults, and choose rather to make bequests to charities. Once we have this information, we need to establish if there is enough wealth for them to meet both their legal obligations and maintain their chosen lifestyle. If not, we need to consider additional solutions to fill the gap. A critical aspect of closing the wealth management loop is for clients to have a valid will in place.

“I start my fiduciary role by establishing if a client has any legal obligations”

At the 2023 Berkshire Hathaway annual shareholders’ meeting, a participant observed that most parents fail to prepare the next generation for the inheritance coming their way, especially if the estate includes a family business that is being left to the heirs. In his response, Warren Buffett said that in his family, he will not sign a will unless all three of his children have read it, understood it, and have made suggestions. He offered some sage words of advice:

The reading of a will should not be the first time that adult heirs of the deceased are hearing about it. Once a will has been drafted and the person has died, it’s too late to make corrections.

You need to handle the passing on of your estate correctly so that your children’s relationships with each other remain intact.

If you want your children to have certain values, especially when dealing with your estate, it’s important that you live those values while you’re alive. A cleverly drawn will won’t substitute for your lack of values or poor behaviour while you were alive.

Given the delicacy of family relationships, it’s critical to work with a fiduciary

practitioner when drafting a will, as a minor oversight may have severe consequences for beneficiaries. An incorrectly executed will can not only tear families apart emotionally, but can result in intestate succession or, if there are grounds, a High Court application to ignore the incorrect execution and declaration that the will is accepted. If a beneficiary or spouse witnesses a will, this could limit their inheritance to their intestate portion, or they may be completely excluded if they are not related to the testator.

Another factor to consider is offshore assets. With people increasingly owning property and having capital offshore, it is critical that all worldwide assets are included in a will. “We have seen how offshore inheritance taxes and estate duty have decimated local estates with devastating consequences for the South African heirs when a fiduciary practitioner was not consulted when the will was drawn up.”

Once the will meets the client’s wishes and is executed correctly, I advise circling back to review all their beneficiary nominations for pension funds, annuities, endowments and life policies to ensure that the right people have been nominated to receive the right benefits. I also advise clients to consult with their adult heirs and make them an integral part of the will-drafting process to ensure everyone is on board and aware of its implications.

Our structuring will have been in vain if a will doesn’t meet the needs of a client’s heirs and factor in their whole financial plan. Unwinding structuring such as a trust and or company may also trigger unnecessary taxes and administration costs.

By Jan du Plessis, CEO

Estate duty: What every South African

should know

Valuation of limited interests

Fiduciary Institute of Southern Africa (FISA)

One aspect of financial advice where fiduciary oversight comes into play is estate duty, which, like most taxes, is inherently complex. However, several core principles are straightforward enough for advisers to explain so that any layperson can understand. This article is not a comprehensive guide to every aspect of estate duty, but it will equip financial advisers to discuss the essentials with their clients.

A key starting point is that an ‘estate’ and an ‘estate for estate duty purposes’ are not the same thing. Estate duty is levied on a worldwide basis. If the deceased was ordinarily resident in South Africa at the time of death, all property owned in South Africa and abroad – subject to certain exclusions – forms part of the estate for estate duty purposes.

In addition to actual property, the Estate Duty Act includes deemed property. This category covers rights attached to property, such as usufructs and fideicommissa (conditional legal arrangements), as well as the proceeds of life insurance policies payable to beneficiaries other than the estate. These deemed assets can significantly increase an estate’s value for estate duty calculations.

Valuation of property

The general rule is that property must be valued at its market value. If an asset is sold bona fide (in good faith) during the estate’s liquidation, the sale price is accepted as the asset’s market value. Where property is not sold, an appraiser appointed under section 6 of the Administration of Estates Act determines the fair market value.

There are two notable exceptions:

1. Shares in a private company must be valued according to a SARS-approved valuation, regardless of any other valuation method or even if the shares are sold.

2. Farming property used for bona fide farming operations may be reduced by 30% for estate duty purposes, offering substantial relief to farming families.

Limited interests, such as usufructs and fideicommissary rights, are valued using a statutory formula: Value of property X 12% X factor of the new beneficiary

Given current economic conditions, very few assets yield 12% annually. As a result, the formula often inflates the value of a ceasing usufruct. It is therefore advisable for the executor to request SARS approval to use a lower percentage. A reduced rate can significantly decrease the value of the ceasing usufruct and, consequently, the estate duty payable.

Deductions allowed

The Estate Duty Act provides for a wide range of deductions. While it is impossible to list them all, the most common include:

• Reasonable funeral expenses, including the cost of a tombstone

All liabilities legally due by the estate Administrative expenses allowed by the Master Accrual claims

• Bequests to approved public benefit organisations

All benefits accruing to the surviving spouse as a result of the deceased’s death, including policies payable directly to the spouse.

• After deducting these expenses and allowances, the net estate is further reduced by a basic rebate of R3 500 000. In certain

circumstances, where the deceased was predeceased by one or more spouses, the rebate may increase to R7 000 000.

Estate duty rates

Estate duty is levied on the dutiable amount of the estate at the following rates:

• 20% on the first R30m

• 25% on any amount above R30m

These progressive rates mean that high-value estates can face substantial estate duty liabilities.

Liability for estate duty on deemed assets

Beneficiaries of deemed assets, such as the beneficiary of a domestic life policy or the next beneficiary of a usufruct or fideicommissum, must contribute pro rata to the estate duty attributable to those assets. This ensures that the estate itself does not bear the full tax burden on assets that do not accrue to it.

“Clear drafting prevents disputes and ensures fairness among heirs”

A common practical issue arises when a child takes out a policy on a parent’s life. At first glance, this appears harmless to the other children, who are often the residual heirs, because the child who owns the policy is responsible for the pro rata estate duty attributable to the policy proceeds. However, the existence of such a policy can increase the value of the estate for estate duty purposes, and may push an estate from non-dutiable to dutiable. When this happens, the estate’s overall estate duty liability increases, and that additional duty is paid from the residue. The result is that the inheritances of the residual heirs are reduced, even though the policy was intended to benefit only the child who took it out. This problem is best addressed in the will. The testator should specify that any estate duty payable by the estate arising from a policy taken out by a child on the testator’s life must be borne solely by that child. Clear drafting prevents disputes and ensures fairness among heirs.

By Henda Kleingeld CFP®, FPSA®, TEP

Finfluencers: Finance’s new F-word?

The moment we feel unwell, we reach for our phones, but not to call a doctor. Nearly 80 per cent of people search symptoms online before speaking to a GP. We know we should not, yet we still do. In an instant-access culture, waiting for an appointment feels intolerable. A persistent three-day headache can quickly become a digitally diagnosed brain tumour rather than a simple need for stronger glasses. We trust the result because it is fast, visible and confidently presented.

When content is easy to access, confidently delivered and widely shared, we tend to accept it. The more likes a post receives and the more followers a content creator has, the more we tend to believe that the information they provide is credible and not just incredibly popular opinions. We are all susceptible to algorithm-driven online material, and that includes financial commentary presented by finfluencers.

Finfluencers – a term that emerged in recent years to describe financial influencers – have been among the fastest-growing creator categories on social media. They package investing, budgeting, debt reduction, insurance, property and crypto into short, highly shareable content across platforms such as personal blogs, Facebook, Instagram, TikTok, YouTube and X. Complex ideas are reduced to sound bites. Markets are explained in minutes. Through repetition, relatability and confident delivery, they shape expectations and influence financial behaviour.

From Wall Street to Johannesburg, TikTok to YouTube, finfluencers are reshaping how millions consume financial information. They have broadened financial literacy globally. This

global phenomenon has particular resonance in South Africa, where nearly 80 per cent internet penetration means financial content spreads quickly – and often fills gaps left by traditional channels, particularly when the focus is on saving, managing debt and building assets in difficult economic times. It would be shortsighted to ignore that contribution.

But there are real concerns. A million followers is not expertise. A slick video is not advice. Some content is sponsored, yet the commercial relationship is not always apparent to the viewer. Behind the polish, knowledge can be shallow. Behind the simplicity, risk can be invisible. In the worst cases, misinformation or outright scams hide behind skilful production and clever branding.

Many finfluencers are not legally authorised to give financial advice, even though some include disclaimers stating that they only provide information. They aren’t held to the same standards of competence and accountability that licensed advisers must meet. They do not necessarily have formal qualifications or structured training. Most importantly, they do not carry a fiduciary duty towards the individuals who act on their content.

Not all finfluencers are unqualified. Some are licensed advisers who use social media responsibly as an outreach tool. Financial advisers can and probably should use these platforms to share content. It would be remiss not to tap into a channel that allows you to reach people who might never otherwise seek financial guidance. But what is shared on social media must remain information. It cannot replace proper financial planning delivered by a certified professional.

Raising financial awareness is positive. Sharing financial content is valuable. The

concern arises when that information begins to morph into recommendations, without the accountability that comes with giving advice.

In a regulated industry, influence has consequences. In South Africa, any person who provides financial advice in relation to a financial product must be authorised by the Financial Sector Conduct Authority. Providing such advice without authorisation contravenes the Financial Advisory and Intermediary Services Act. That isn’t a technicality, it’s the legal line between casual information and regulated advice. And that is the critical difference.

A finfluencer has followers. That relationship is broad and anonymous. It is confirmed by a click on ‘like’ or ‘follow’. It does not come with personal knowledge or legal responsibility.

A financial adviser has clients. That relationship requires a thorough understanding of a client’s full financial circumstances and access to all relevant information before any recommendation is made. It means respecting your fiduciary duty and acting in your client’s best interests, especially when the advice is not exciting or currently trending.

For advisers who have consistently valued and nurtured client relationships and genuinely placed their clients’ interests first, finfluencer content becomes what Google is to medicine. It provides facts, but you would not book an appointment with a brain surgeon based solely on a search engine diagnosis.

Clients may come across something online that causes concern or sparks excitement. They might call their adviser or arrive at the office with a new idea about an investment, a savings strategy, or an early retirement plan they saw on a feed. That is part of the environment in which we now operate. Monitor the content posted online by the most popular finfluencers so that you can identify misinformation and risky schemes, and design strategies to address them proactively. Do not see it as a crisis or criticism. See it as a conversation starter or client education opportunity.

“Information begins to morph into recommendations, without the accountability that comes with giving advice”

Clients turn to advisers to verify what they saw online because they trust their professional guidance. It is unlikely that clients will overhaul an entire investment or retirement portfolio without first consulting the adviser who has guided them in building it over time.

When the adviser-client foundation is strong, finfluencing is not an existential threat. It is another source of information in a noisy world. Another F-word in financial services. Clients do not follow advisers with a click. They follow with trust, placing their financial future in the hands of someone bound by skill, professionalism and fiduciary duty.

By Grant Dixon Investment Specialist at Peregrine Capital

MRisk is what you don’t see

organ Housel once wrote, “Risk is what’s left over after you think you’ve thought of everything.” That idea has stayed with me. We spend so much time trying to predict, model, and prepare for what might go wrong, but the biggest dangers are often the ones we never even considered.

After spending years working closely with financial markets and investors, my own understanding of risk has evolved. What I’ve learnt is simple: risk isn’t universal. It changes depending on who you are, what you own, and what you need your money to do. Importantly, asset managers and individual investors often talk about “risk” as if they’re speaking the same language, but they’re not. For most asset managers, risk is defined as permanent capital loss.

The focus is at the security or portfolioconstruction level:

• Diversification

• Position sizing

Stop-losses

Derivative protection

Risk budgets and guardrails.

These are all tools designed to ensure that no single investment can catastrophically impair the portfolio. This type of risk is known. When you buy a share or a bond, you accept upfront that markets move, mistakes happen, and losses are possible. Most individual investors in South Africa don’t think about risk this way. What investors want is sensible risk-taking that gives their capital the best chance to grow above inflation. Investor risk tolerance isn’t fixed; it shifts as life circumstances change. A young professional with a long-time horizon may be comfortable with higher volatility, while someone approaching retirement becomes more sensitive to drawdowns that could affect their income. Major life events, changing jobs, starting a family, selling a business, or entering retirement all reshape the balance between required returns and emotional comfort. Understanding that your perception of risk will evolve is critical to ensuring your investment strategy evolves with you.

I’ve personally experienced this. My grandmother entrusted me with her investment portfolio when I was still a wealth manager. At the time, the strategy made perfect sense. Her capital was conservatively invested, the income was stable, and on paper everything was working exactly as planned. Then life intervened.  She had an unfortunate fall and broke her femur. Overnight, medical expenses surged, and the level of care she required at her retirement village increased materially. Nothing had gone ‘wrong’ in the portfolio. Markets hadn’t crashed. The investments hadn’t failed. But her circumstances had changed, and with them, the definition of risk.

Suddenly, decisions that once felt prudent became constraints. Capital preservation mattered, but so did liquidity and income certainty. At just over 90 years old, her ability to tolerate volatility was limited, and her margin for error was effectively zero. The real risk wasn’t market loss; it was the possibility that her capital could no longer support the life she needed to live.

That experience fundamentally changed how I think about risk. It reinforced that the greatest threats to an investor’s outcome are often invisible until the moment they become unavoidable.

I’ve seen the opposite problem too: A younger investor, early in his career, earning well and saving consistently, but deeply uncomfortable with volatility. The portfolio was conservatively positioned, designed to avoid the discomfort of the market. It felt safe.

Years later, the issue wasn’t losses, it was progress. Returns lagged the progress of his life. As responsibilities increased, expenses did too, and it became obvious that the portfolio had never been given the opportunity to do the heavy lifting required of it.

There was no single bad year to point to. No dramatic mistake. Just a long stretch of underexposure to growth when time was the greatest asset. The risk wasn’t what the investor experienced; it was what they quietly missed out on.

South Africans investors generally want three things:

1. Growth above inflation

2. The ability to draw down sustainably

3. A level of volatility they can emotionally tolerate.

Even if they don’t use the jargon, what most investors really care about is risk-adjusted returns; not just high returns at any cost, but returns that justify the volatility required to achieve them.

Here’s where the unseen risk creeps in. What happens when an investor’s tolerance for volatility doesn’t match the return they need to sustain their lifestyle? This is the quiet risk that derails many financial plans, the risk of outliving your capital because your portfolio never had the chance to grow fast enough. When this mismatch occurs, investors face three possible choices:

1. Move up the risk curve

Accept higher volatility than you’re truly comfortable with and hope the long-term returns make up for it.

2. Adjust your lifestyle

Acknowledge that your current risk profile cannot realistically produce the returns required, meaning you either draw down less, or accept the real possibility of capital depletion over time.

3. Find better risk-adjusted returns within the same risk band

Seek out an asset manager with a stronger track record of generating excess return for the same level of risk. This allows investors to potentially improve long-term outcomes without increasing volatility – arguably the most elegant solution. The difficulty can be finding an asset manager whose investment philosophy and process is tailored to optimising absolute returns within controlled volatility targets.

When we think about risk, we tend to imagine market crashes, geopolitical shocks, recessions, and black swans. Financial markets are forward-looking, so these events typically get priced in quickly and digested into future growth and earnings projections. Those are real risks, but typically not the biggest danger for

most long-term investors. The biggest danger is the slow, silent erosion of purchasing power, the moment your portfolio falls behind your lifestyle needs and inflation, forcing decisions you didn’t plan for. Lifestyle longevity risk is what keeps most investors up at night. Like all meaningful risks, it’s usually the one you don’t see coming.

Now consider an asset manager with a multi-decade-long track record of elevating investor returns while keeping risk constrained, generating some of the strongest inflationbeating, risk-adjusted outcomes in the market.

At Peregrine Capital, we’ve spent more than 27 years building investment strategies that focus obsessively on risk-adjusted returns. Our goal is not only to generate strong long-term performance, but to ensure that each unit of volatility is rewarded. For investors seeking meaningful, compound growth over time, without taking on more risk than necessary, this is exactly where our strategies can help.

Risk will always be part of investing. It’s about understanding which risks truly matter, which ones you can live with, and which ones quietly

threaten the life you’re trying to build. When you partner with an asset manager who treats risk as a starting point, not an afterthought, you give yourself the best chance of achieving long-term, inflation-beating growth without compromising your peace of mind.

The rate of return is calculated on a total return basis, and the following elements may involve a reduction of the investor’s capital: interest rates, economic outlook, inflation, deflation, economic and political shocks, or changes in economic policy. Annualisation is the conversion of a rate of any length of time into a rate that is reflected on an annual basis. Past performance is not indicative of future performance. The Peregrine Capital High Growth QI Hedge Fund (“High Growth Fund”) is a medium to high-risk investment. The Peregrine Capital Pure Hedge QI Hedge Fund (“Pure Hedge Fund”) is a low to medium risk investment. The figures shown reflect for the funds for the abovementioned qualified investor

Risk classifications are relative and based on the funds’ mandates, investment strategies and historical volatility. Hedge funds may use investment techniques and instruments that differ

those used by traditional long-only funds. Risk as referenced herein does not represent a measure of

compared to other fund categories. Any reference to risk in graphical presentations refers to

to

The

Please refer to the latest MDD/factsheet for further information.

request from the manager. The rate of return is calculated on a total return basis, and the following elements may involve a reduction of the investor’s capital: interest rates, economic outlook, inflation, deflation, economic and political shocks or changes in economic policy. Annualisation is the conversion of a rate of any length of time into a rate that is reflected on an annual basis. Past performance is not indicative of future performance. This is a medium to high-risk investment. The value of participatory interests or the investment may go down as well as up. Collective investment schemes are traded at ruling prices and can engage

Compounding without the cracks: The role of hedge funds in volatile markets

By Jarred Houston Portfolio Manager, All Weather Capital

The purpose of a hedge fund is often misunderstood. It does not attempt to outperform equities in a raging bull market, but to capture more upside in a bull market than downside in a bear market. If done well, hedge funds provide a smoother journey and greater portfolio diversification.

Data from Hedge Fund Research (HFR) shows that broad hedge fund indices have historically delivered equity-like long-term returns with materially lower volatility than global equity markets. Lower correlation and lower drawdowns are not academic concepts; they are the building blocks of improved compounding. For pension funds managing long-dated liabilities, smoothing the journey can be just as important as maximising the destination.

“Behavioural research has consistently found that the average equity fund investor underperforms the funds they invest in”

Behavioural research has consistently found that the average equity fund investor underperforms the funds they invest in – often by several percentage points per annum – largely due to adding exposure after strong returns and reducing allocations after drawdowns. They thus become victims of volatility.

Hedge funds are designed to interrupt that cycle. They do not rely on a rising index to generate returns. Instead, they seek to exploit mispricing between securities, to monetise dispersion, and to hedge out broad market risk. When volatility spikes and correlations break down, opportunities increase. By aiming for steadier, risk-adjusted returns, hedge funds seek to keep investors invested. The

greatest destroyer of long-term wealth is not volatility per se, but abandoning a strategy at precisely the wrong time. This argument carries particular weight in South Africa, where the structure of the FTSE/JSE All Share Index has evolved markedly over the past decade. The index is increasingly concentrated. That concentration creates an illusion of diversification while embedding significant single-stock and thematic risk. Buying the index at higher levels in such an environment may feel prudent – after all, one is ‘owning the market’. But if index performance is driven by a narrow leadership group or a single sector trading at elevated valuations, risk quietly accumulates beneath the surface.

One of the advantages of a hedge fund is that it is not compelled to own risk in benchmark proportions. It can hold exposure to a sector like gold when the risk-reward is compelling – without automatically inheriting a double-digit percentage weight simply because the index dictates it. Equally, it can reduce or hedge that exposure if valuations become stretched. Flexibility is not about being contrarian for its own sake; it is about weighing the odds.

The mathematics reinforce the philosophy. A 30% drawdown requires a subsequent 43% gain merely to break even. Avoiding large losses is disproportionately powerful in a compounding framework. By not chasing an equity benchmark, and by focusing instead on preserving capital during downturns, a hedge fund aims to improve the investor’s realised return – the return actually experienced over time, not the headline figure of a single calendar year. Hedge funds are not equity replacements. They do reduce portfolio volatility, mitigate index concentration risk, and dampen the impulse to add and withdraw capital at the wrong times. In more concentrated and sentimentdriven markets, the objective is not to win every race. It is to stay in the race – compounding steadily, avoiding the deep drawdowns, and ensuring that clients remain invested long enough for probability to work in their favour.

What ESG means for FSPs

By Ryno Volschenk Masthead Regional Manager: Johannesburg

As Environmental, Social and Governance (ESG) principles become increasingly important, financial service providers (FSPs) have an opportunity to shift their thinking. Rather than treating ESG as another administrative burden, early adopters can embed it into governance, advice and risk management –and in doing so, build trust, reduce risk and create long-term value.

What is ESG reporting?

At its core, ESG reporting is about transparency. It’s the process of disclosing how an organisation performs against key environmental, social and governance indicators in a structured, responsible way.

In the South African context, these indicators are shaped by local frameworks like the King V Report on Corporate Governance (2025), the JSE Sustainability Disclosure Guidance (2022) and even the Companies Act – especially for listed or public companies. These frameworks guide companies to report on areas such as:

• Carbon emissions and energy use

• Water consumption

• Labour practices and transformation Community engagement and B-BBEE targets Anti-corruption efforts Governance structures and oversight.

While these reporting obligations typically apply to larger corporates, they also offer valuable guidance for smaller firms looking to future-proof their practices.

Why ESG matters for FSPs

Clients are increasingly seeking products and solutions that reflect their personal values. While younger investors have helped drive this trend, interest in ESG extends well beyond one generation. Across demographics, clients are showing greater awareness of environmental and social impact. As demand grows, FSPs are incorporating ESG considerations into their advice processes – not only to meet expectations, but also because ESG can strengthen long-term risk management and portfolio resilience.

Regulators, meanwhile, are sharpening their focus. In 2023, the FSCA launched its Sustainable Finance Programme of Work to align the financial sector with global ESG standards and climate goals. This was followed by the 2024 Sustainable Finance Consumer Risk Report and Roadmap and the Sustainable Finance Update Report 2025. The regulator has also consulted on climate-related disclosures and sustainability labelling standards to curb greenwashing, with further guidance on applying existing legislation within a sustainable finance framework expected.

Understanding the legal framework

Although there’s no single ESG law that applies to all FSPs, several existing legal and governance frameworks are relevant and can help guide FSPs who want to implement or improve ESG practices:

The King V Report, released on 31 October 2025, is South Africa’s go-to corporate governance guide and encourages ESG transparency and integrated reporting as a matter of best practice.

• The JSE Disclosure Guidance (2022) provides listed companies with ESG reporting expectations and frameworks aligned with international standards.

“Clients are increasingly seeking products and solutions that reflect their personal values”

While the Climate Change Act, 22 of 2024, is not FSP-specific, its legislation reflects the national push towards sustainability.

• The FAIS Act and General Code of Conduct doesn’t name ESG directly but some of its sections are applicable:

• Section 2: Acting in the client’s best interest includes considering ESG-related factors where they could materially affect product performance.

• Section 3: Managing conflicts of interest, particularly if a recommended product claims ESG alignment but doesn’t live up to it.

• Section 7: Disclosure and transparency require accurate, non-misleading product representations. This includes avoiding greenwashing and ensuring ESG claims are factually substantiated.

• Section 8: When it comes to suitability of advice, if a client indicates ESG preferences, these must be factored into the advice process.

The Treating Customers Fairly (TCF) Outcomes don’t explicitly reference ESG, but the principles closely align with it and support its implementation in the following ways:

• Outcome 1: Customers can be confident they are dealing with firms where TCF is central to the culture. Embedding ESG into a firm’s values and governance demonstrates a commitment to fairness, responsibility and ethical conduct.

• Outcome 2: Products and services are designed to meet the needs of identified customer groups. ESG factors help guide product design and advice to align with client values and long-term sustainability goals.

• Outcome 3: Customers are provided with clear information and are kept appropriately informed before, during and after the point of sale. Accurate ESG disclosures help prevent greenwashing and ensure that clients understand the characteristics, benefits and limitations of ESG-linked products.

The Fit and Proper Requirements outline the standards of honesty, integrity, competence and operational ability expected of FSPs and their Representatives. In the ESG context, this means having the competence to understand and apply ESG considerations and to ensure any ESG claims are truthful, evidence-based and clearly communicated.

• Upcoming legislation like the Conduct of Financial Institutions (COFI) Act and regulatory reporting framework such as the OmniRisk Return (Omni-RR) are likely to increase expectations around governance, risk and data – all areas that intersect with ESG.

How to get started: A practical guide for FSPs

Whether you’re a large financial institution or a small advice practice, integrating ESG doesn’t

have to be overwhelming. The key is to take a structured, phased approach:

• Start with a gap analysis: Assess your current governance and reporting frameworks against ESG best practices Update policies and governance structures: Based on the findings of the gap analysis:

• Update responsible investment and environmental impact policies

Assign ESG accountability – either through a dedicated ESG committee or the board

• Ensure ESG becomes part of business strategy and risk management.

• Begin collecting data: Start gathering measurable ESG data as early as possible. This includes metrics like your carbon footprint, B-BBEE performance and community engagement. This data will become increasingly important for regulatory reporting under COFI and the Omni-RR.

Build internal capability: Provide staff with basic ESG training so your team is equipped to understand and apply ESG in the due diligence of providers (services and products), advice, product discussions and operational decision-making.

Communicate your progress: Once the foundations are in place, share your ESG commitments with clients. Transparency builds trust.

For smaller FSPs: Focus on the fundamentals. Align first with what the FSCA expects, then scale over time.

Pitfalls to avoid

As you implement ESG, keep these common risks in mind:

• Greenwashing: Avoid overstating ESG credentials or using vague marketing language. All ESG claims should be backed by real data and clear documentation.

Neglecting ESG in advice: If a client expresses ESG-related preferences, these must be considered in your product selection and advice process.

• Inadequate systems: Poorly designed ESG processes can lead to inaccurate disclosures, missed deadlines or future compliance risks.

Why ESG is worth it

Like any new regulatory focus, ESG can feel like extra work at first. But by getting ahead of the curve, you can build resilience, protect your clients and unlock real value. Most importantly, ESG isn’t just about compliance – it’s about building a practice that is responsible, forward-thinking and equipped for longterm success.

By Vuyolwethu Nzube Truffle Asset Management ESG Analyst

MFrom signal to crisis: Early warning signs predict share price falls

arkets often react sharply to major Environmental, Social and Governance (ESG) investigations, court rulings or regulatory decisions. What is less appreciated is that most significant share price moves are rarely triggered by completely new information. In many cases, the warning signs are visible years in advance. Monitoring controversies and regulatory commentary may not tell investors exactly when a crisis will crystallise, but it often reveals that risk is building. Below are examples where early signals preceded material market reactions.

FirstRand: The motor finance ripple effect

The South African bank’s share price fell by around 2% in October 2024 after the UK Court of Appeal ruled against motor finance lenders, finding that undisclosed commissions could amount to bribery. The move reflected investor concern about potential redress and wider industry implications. In contrast, the share price rose around 2.5% in August 2025 after the UK Supreme Court clarified that broader industry-wide payouts would not be required. Further clarification on redress provisions also supported sentiment.

Peers were hit harder. Close Brothers, for example, fell 22% on the initial news in October 2024, and 13% after warning provisions would be materially higher than what they had previously set aside in 2025. Importantly, while the court case and regulatory action began in 2024, the warning signs and potential risks were visible earlier. The UK regulator had already flagged these commission arrangements as unfair and banned them in 2021.

Boeing: When culture eats strategy for breakfast

Boeing provides a more protracted example of how repeated signals can compound over time. The two fatal 737 MAX crashes in 2018 and 2019, which claimed 346 lives, led to a global grounding of the fleet and a sharp erosion in market value. The company subsequently faced ongoing scrutiny, operational disruptions and financial penalties, including a $2.5bn settlement in 2021.

Each new safety incident reinforced investor concern. The January 2024 Alaska Airlines door plug blowout triggered renewed selling pressure, and in June 2025, following the first fatal crash of a

Global warming is not cool.

Investing with Truffle means that while growing and protecting your wealth, you’re also growing and protecting our planet and its people. Invest with an asset manager that promotes change without sacrificing performance.

787 Dreamliner, shares fell more than 5% in a single day. The cumulative impact of safety failures added financial penalties of $4.9bn, which led to costly delays on its 777X aircraft program in 2025. Unlike a single legal event, Boeing’s case demonstrates how a pattern of safety and governance failures can signal deeper cultural and operational weaknesses. When early warnings are not addressed, they tend to resurface – often at a higher cost.

The investment lesson

ESG controversies are not abstract; they often translate directly into earnings downgrades and sharp share price moves. For client portfolios, this reinforces an important point: risk management is not about reacting once a ruling is handed down. It’s about identifying risks while they are building and understanding how they could affect long-term value.

At Truffle, by assessing governance quality, regulatory exposure and operational risks before they escalate, we aim to reduce the probability of unexpected capital impairment, helping advisers protect client wealth rather than having to explain drawdowns after the fact.

Impact Awards recognise sustainable business leadership

Alexforbes has launched the inaugural Alexforbes Paragon Impact awards, a new annual initiative recognising leading sustainability and impact performance among JSE Top 100 companies. The awards aim to highlight businesses demonstrating resilient and futurefocused strategies that contribute to South Africa’s economic, social and environmental priorities.

By Ntheye Lungu Head of Governance, Risk, and Compliance (GRC) Operations and Sustainability at Old Mutual  Insure

SESG makes responsible underwriting the new norm

ustainability has rapidly shifted from a fringe topic to a defining force in the global insurance sector, reshaping how insurers assess risk, design products, and make investment decisions.

The third pillar is engagement, a crucial component in the South African market where many industries face significant transition challenges.

“Companies that demonstrate net positive impact within the South African context deserve recognition”

The Impact Awards winners will be selected through an independent and data-driven assessment of the JSE top 100 companies conducted by Paragon Impact. Paragon Impact is an award-winning impact monitoring and measurement solution aligned with the United Nations Sustainable Development Goals (SDGs). The evaluation will assess the real-world impacts of company activities and their financial relevance to long-term value creation, resilience and risk management within the context of South Africa’s key economic, social and environmental challenges. In addition to recognising leading impact performers among the JSE top 100 companies, Alexforbes intends to create an index based on the top-performing impact companies and develop solutions to track this index over the coming months.

Carina Wessels, Executive: Impact Advisory at Alexforbes, says, “Integrated reporting awards are well established in the South African market. These awards largely assess the quality and completeness of environmental, social and governance (ESG) disclosures or alignment with reporting frameworks. While this remains important, moving beyond a disclosure-led approach towards a multidimensional view that considers an organisation’s impact on people and the planet supports our strategic intent to drive real-world impact and aligns with regulatory direction and evolving stakeholder expectations. Companies that demonstrate net positive impact within the South African context deserve recognition.”

Brett Wallington, Head of Paragon Impact, powered by Alexforbes, comments, “The awards will recognise leadership across core dimensions of sustainable business performance – including climate and environmental stewardship, social and economic inclusion, governance and accountability, and impact measurement and integration. Award categories will include earth and climate stewardship, responsible resource use and innovation, governance, ethics, impact integration and accountability.”

Public data for the JSE top 100 companies as at 1 January 2026 will be automatically assessed through the awards evaluation process. The Alexforbes Paragon Impact Awards will take place in March 2026.

As climate change intensifies and social expectations rise, insurers are under growing pressure to integrate Environmental, Social and Governance (ESG) principles into their operating models.

Responsible underwriting, the practice of integrating ESG criteria into risk assessment and pricing, is one of the most powerful levers insurers have to influence positive change. Globally, insurers have already begun restructuring their portfolios by incorporating ESG data into risk evaluation. This shift allows insurers to improve forecasting accuracy, limit losses from climate-related events, and promote more ethical business practices.

In South Africa, where insurers face both economic volatility and climaterelated pressures, the stakes are even higher. The sector cannot continue prioritising short-term premium growth at the expense of long-term risk stability.

For South Africa’s insurers to contribute meaningfully to national sustainability goals, the focus must evolve from chasing premium growth to creating long-term portfolio value.

There are three core pillars of responsible underwriting that guide Old Mutual Insure’s approach. The first is avoidance, which centres on excluding high-risk industries or clients unwilling to adopt credible sustainability commitments. Avoidance is about establishing clear exclusion policies for universally non-negotiable risks, such as controversial weapons or systemic corruption. For high-emissions sectors, avoidance must be nuanced, targeting only entities unwilling or unable to commit to viable transition pathways.

The second pillar is integration, which includes embedding ESG data into underwriting decisions. Currently, climate-related data, such as flood mapping and catastrophe modelling, is most prevalent, but other metrics are expected to grow in importance. In the near future, ESG data points such as water-use intensity and governance scores will play a much bigger role in determining risk.

Beyond exclusion, insurers should actively partner with clients in highemissions sectors to support their Just Transition plans. This approach helps drive socio-economic transformation while also opening new growth opportunities in emerging green sectors. External forces are accelerating this shift. Investors are increasingly scrutinising insurers’ ESG performance, with poor sustainability ratings now linked directly to higher capital costs.

An insurer’s performance on sustainability questionnaires impacts both its ESG score and, critically, its core credit rating. This directly influences the cost of capital and access to ESGfocused investors. This link between sustainability and financial performance is making responsible underwriting a business imperative rather than a voluntary exercise.

Regulators and global reporting bodies are also tightening expectations. In South Africa, guidance from the JSE and frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD) are pushing insurers to improve transparency and integrate sustainability into risk management. These frameworks are helping standardise reporting, making it easier for investors and consumers to judge insurers’ long-term resilience. There are, however, concerns that sustainability might conflict with profitability, but the opposite is true.

Sustainability is not a trade-off with profit. It is about aligning profit with purpose, and in doing so, insurers can achieve financial success while contributing positively to society and the environment.

ESG integration will define the future of insurance. The future of sustainable insurance will see insurers not only embracing ESG data but also shaping new products and services that reward sustainable behaviour. This evolution will further create a more resilient, transparent, and socially responsible industry – one in which insurers actively contribute to environmental protection, social progress, and long-term economic stability.

Offshore investing: Choosing between life insurance bonds and sinking funds

Offshore endowments remain a popular solution for South African investors seeking the benefits of international diversification, tax efficiency, and structured long-term planning. Yet one key consideration often requires deeper analysis: whether the endowment should include an insured life, forming a life insurance bond, or whether it should function as a sinking fund, also known in several jurisdictions as a capital redemption bond (CRB). Understanding the distinctions between these structures are essential for identifying the most appropriate solution for each client.

Understanding the sinking fund structure

The concept of a sinking fund dates to the early 1700s, when governments used dedicated savings plans to repay national debts. Today, the term has a broader application and refers to a structured investment designed to meet a future objective. Under South Africa’s Long-term Insurance Act, a sinking fund policy is defined as a contract that provides one or more sums of money on a fixed or determinable future date, critically, without an insured life attached.

A typical CRB carries a 99-year lifespan, enabling seamless transfer of ownership across generations or between entities. This extended term is necessary because many jurisdictions prohibit investment products without a determinable end date.

While many offshore endowments distinguish between the owner and the insured life, these roles can overlap. In some cases, the insured life has no ownership rights, yet the maturity of the endowment is linked to that person’s death. A sinking fund differs precisely because it removes this dependency on a life event. As a result, the absence of an insured life gives rise to notable advantages.

Sinking funds do not automatically require liquidation upon the death of an individual, making them ideally suited to long-term planning needs. Legal entities can make use of sinking funds without considering the impact of a natural person’s death. In South Africa, they offer legitimate tax deferral opportunities under the Five Funds tax dispensation, as death does not automatically trigger liquidation. They also offer simpler ownership transfer mechanics

By Hannes Esterhuyse Regional Manager at Momentum Wealth International; and Marius Cilliers Regional Manager at Momentum Wealth International

than an endowment that includes an insured life, and they are especially wellsuited to planning techniques such as asset-swap structures.

The role of the life insurance bond

Endowments with an insured life, commonly referred to as life insurance bonds in the international context, bring their own set of strategic advantages. Advisers can use them to build intergenerational planning structures, especially when multiple insured lives from different generations are included.

“Life insurance bonds can provide cost efficiencies when compared to setting up and maintaining an offshore trust”

These products also offer creditor protection under the Long-term Insurance Act, often making them a safer planning tool for clients concerned about personal liability.

Life insurance bonds can provide cost efficiencies when compared to setting up and maintaining an offshore trust. They further enable strategic liquidity planning through beneficiary nominations, which can be crucial for providing cash to a surviving spouse or dependants. Some providers also allow advisers to choose between succession of ownership and beneficiary payout structures, offering greater flexibility. In contrast, sinking funds generally only provide for successor nominations.

The decision between transferring ownership or paying out proceeds typically rests on whether the beneficiary should gain immediate access to money. Ownership transfer is often preferred when tax deferral, such as postponing capital gains tax, is required, when advisers wish to avoid liquidations during declining market cycles, or when dealing with fixed-term instruments that are best left to mature.

Shared advantages across both structures

Despite their structural differences, sinking funds and life insurance bonds share several important advantages. Many offshore providers today make use of multi-policy arrangements with sub-policies, improving liquidity and enabling partial withdrawals.

Some endowments, depending on the provider, also allow Joint-and-Survivor ownership, a mechanism rooted in English law, where surviving owners automatically assume full ownership without the need for estate administration.

Both structures offer similarly streamlined tax administration. The life company accounts for and pays the tax, simplifying the tax burden on the investor. Some clients question whether these products should still be viewed as offshore investments when aspects of the structure fall under South African legislation. The answer lies in the permitted ‘branch model’, which allows offshore endowments to remain fully compliant while still being treated as offshore assets, even if certain administrative consequences fall under South African law. Both sinking funds and life insurance bonds allow advisers to avoid executor’s fees through beneficiary nominations, although the value of the endowment may still form part of the deceased’s estate for estate duty purposes under section 3 of the Estate Duty Act. They can also help mitigate exposure to offshore situs tax, and, when used correctly, they can eliminate the need for a separate offshore will.

Choosing the most suitable structure for each client

As with most financial planning decisions, there is no universally ‘better’ choice between a sinking fund and a life insurance bond. Each structure has unique features that align with different planning objectives, client profiles, and long-term strategies. The key lies in understanding these nuances and applying them in a client-centric manner.

With the support of Momentum Wealth International’s specialists, financial advisers can confidently guide clients toward the solution best aligned with their circumstances and goals. To learn more about how these solutions can integrate seamlessly into your business and enhance your advice process, speak to your Momentum consultant or visit our website here: https://www.momentum. co.za/momentum/personal/wealth/ offshore-investing/momentum-wealthinternational

By Norbert Koenig Managing Director of RED4

A stable offshore platform

For decades, South Africans have looked to offshore to protect and grow their wealth. Currency volatility, policy uncertainty and the need for long-term capital preservation have made global diversification a strategic necessity rather than a luxury. Increasingly, offshore property has become a preferred vehicle, offering hard-currency income, capital appreciation and lifestyle optionality. Among offshore destinations, Mauritius has emerged as one of the most attractive hubs within Africa.

Offshore property typically serves three objectives for South Africans: currency diversification, income stability and longterm growth. A well-structured offshore asset generates returns in hard currency, helping protect purchasing power while creating income that can strengthen in rand terms over time. When supported by strong rental demand and legal certainty, property becomes more than a hedge, it becomes a compounding wealth tool. While traditional markets such as the UK, Portugal, Australia and the UAE remain popular, Mauritius distinguishes itself through proximity, accessibility and a well-regulated investment framework. South Africans are now among the largest groups of foreign buyers on the island. Mauritius has built a reputation as Africa’s

By Graeme Forster Portfolio Manager at Orbis, the offshore partner of Allan Gray

most credible offshore property market. Its legal system, based on English and French law, offers transparency and strong investor protections. The country consistently ranks highly for economic freedom, governance and ease of doing business – key considerations for long-term capital.

Equally compelling is its tax environment. There is no capital gains tax, no inheritance tax and no wealth tax, allowing investors to structure holdings efficiently while benefitting from robust tourism-driven rental demand.

The practical reality

A common misconception relates to beachfront ownership. More than 90% of Mauritius’ shoreline is reserved for Mauritians, meaning foreign buyers generally cannot purchase standalone beachfront land. However, this has created a valuable niche: boutique developments positioned one road back from the beach. These properties allow legal foreign ownership while retaining proximity to the coastline. From an investment perspective, this combination of legality and location has created scarcity value. Apartments within walking distance of the beach consistently rank among the island’s most sought-after assets.

A structured buying process

The Mauritian purchasing process is transparent

and legally structured. Most foreign buyers acquire property off-plan under a VEFA (Vente en l’État Futur d’Achèvement) contract, which links payments to construction milestones and holds deposits in escrow, reducing risk. Buyers may access mortgage finance of up to 60% or fund purchases in hard currency. Ownership is registered with full title protection. Developers are expected to provide bank guarantees for project completion, as well as warranties covering hidden defects and structural integrity.

Location and professional management

Areas such as Trou aux Biches and Grand Baie continue to deliver strong rental performance, supported by year-round tourism and established infrastructure. Professionally managed short-term rental models have further enhanced returns, optimising occupancy, pricing and maintenance while enabling hands-off ownership for foreign investors.

A strategic wealth tool

Offshore property is no longer purely lifestyle driven. For South Africans, it has become a strategic pillar of wealth creation, combining currency diversification, yield and geographic spread. Mauritius stands out not for speculation, but for structure and consistency. In a world where capital seeks certainty, those fundamentals matter.

Are you swimming in the right water?

In his 2005 commencement address, ‘This Is Water’, David Foster Wallace tells a simple parable. An old fish greets two younger fish by saying, “How’s the water?” They swim away asking themselves, “What is water?” It’s a profound message: The most pervasive and important realities in our lives are often the ones we fail to notice. The same is true in investing. The market environment can become so familiar that it almost becomes invisible.

The water we’ve been in

For well over a decade, that ‘water’ has been defined by a specific global dynamic: a world of mercantilist policies, cheap currencies, and export-led growth. Many regions – most notably in Asia and parts of Europe – have run policies designed to maintain competitive currencies and subsidise exports. Those exports were largely aimed at the US, with surplus dollar earnings flowing back into US asset markets.

The result was a powerful self-reinforcing cycle. Capital inflows into the US pushed up asset prices

and drove down interest rates. Lower rates fuelled a fiscal boom, stimulating imports and further deepening the trade and capital imbalance. The dollar and US assets strengthened in tandem, rewarding investors who rode the trend.

Passive investing thrived in this environment. With US markets and the dollar seemingly locked in a perpetual uptrend, the path of least resistance for global capital was into the US. That was the water we all swam in.

How the water is changing

But water doesn’t stay still. The environment has shifted dramatically. Policy in the US has turned inward, emphasising domestic industrial revival and strategic tariffs. This marks a structural break from the old regime. Export-led growth models are harder to sustain when the main destination market becomes more self-sufficient.

For the export economies, this change forces adaptation. If they can no longer rely solely on US demand, they will need to stimulate their own. Rather than flowing abroad, vast pools of domestic savings may now be redirected inward towards investment, fiscal spending and local consumer demand.

This has significant implications for investors. Global portfolios are still heavily concentrated in US assets and the dollar – an understandable legacy of the last cycle, but potentially a dangerous one if the tides are turning. Outside the US, assets and currencies remain cheap – a ‘double discount’. Now, they may also have a catalyst: a reversal in the capital cycle as money begins to flow back home. Fiscal expansion in regions such as Asia and Northern Europe could strengthen local currencies and lift long-neglected equity markets.

US stocks have continued to receive more analyst coverage over the last decade, and given the lack of eyes on ex-US stocks, these markets are rife with inefficiency and, therefore, opportunity for active management. Indeed, an active lens is essential given the complexity involved with investing across dozens of markets with wildly different economic, political and regulatory regimes. While not as extreme as the immediate post-pandemic period, valuation gaps outside the US remain historically wide. The water may be changing – and with it, the direction of capital and opportunity.

By Lance Lawson Business Development Consultant at Sovereign Trust SA

AStructuring for scale: The role of offshore funds in global growth

s investment strategies, asset classes and investor bases become increasingly international, purely domestic fund structures can place South African investment managers at a competitive disadvantage. For this reason, offshore fund formation is no longer a niche activity. Rather, it has stepped into the spotlight as a strategic response to the realities of operating in global capital markets.

At its core, an offshore fund offers credibility, scalability, and access. Global allocators, including institutional investors, development finance institutions, and high-net-worth individuals, are far more comfortable deploying capital into structures domiciled in established international financial centres, and jurisdictions such as Mauritius, Luxembourg, Malta, and the Cayman Islands offer legal and regulatory frameworks that are well understood, predictable, and aligned with global investment norms.

"Every offshore fund journey starts with clarity”

Tax efficiency is another important driver. Many offshore jurisdictions operate on a low or neutral tax basis at the fund level, while also having extensive double taxation agreement networks to prevent unnecessary tax leakage on cross-border investments. Crucially, these benefits sit firmly within the bounds of international best practice and South African tax compliance, including economic substance requirements and anti-avoidance rules. Offshore structures also offer a degree of flexibility that is difficult to replicate domestically. They accommodate global standards in fund mechanics – limited partnerships, carried interest arrangements, co-investment vehicles, and multiple share

classes – making it easier to align investor expectations, fee models, and governance frameworks.

Importantly, going offshore does not mean disengaging from South Africa. In many structures, the investment management or advisory function remains local, earning fees and retaining skills, employment, and value creation onshore, while the fund itself is domiciled in an internationally competitive jurisdiction.

When establishing an offshore fund, the following four critical steps must be approached correctly and in the right sequence:

Step 1: Define the strategy and structure

Every offshore fund journey starts with clarity. Investment strategy, target investor profile and geographic focus all influence the choice of jurisdiction and vehicle. At this stage, managers need to be clear on exactly what they are building. This includes deciding what type of fund to establish (private equity, venture capital, hedge, credit or property) and whether it will be open- or closed-ended, who the target investors are, and what they expect in terms of returns, liquidity and reporting, as well as how governance structures and fee arrangements will be set up. Getting these fundamentals right early on is critical, as they inform the choice of jurisdiction and vehicle, and ultimately shape every step that follows.

Step

2: Jurisdiction selection and tax planning

Choosing the right jurisdiction is a balancing act. Tax efficiency matters, but so does regulatory credibility, treaty access, and investor familiarity. Increasingly, economic substance requirements and international transparency standards play a central role in this decision. All of this makes early, well-considered tax planning essential. It ensures compliance with South African rules around controlled foreign

companies and place of effective management, while avoiding the need for costly restructuring once capital has been raised.

Step 3: Regulatory licensing and fund formation

With the structure agreed, attention turns to formal establishment. This phase is often the most technically complex, involving multiple stakeholders and workstreams. It typically includes drafting offering memorandums and constitutional documents, appointing directors and service providers, securing regulatory approvals, and establishing banking and custody arrangements. Coordination is key; misalignment at this stage can delay launch timelines and undermine investor confidence.

Step

4: Substance, operations, and ongoing compliance

Modern offshore funds are expected to demonstrate real substance. This goes beyond having a registered address. It requires meaningful governance, decision-making, and operational oversight. Ongoing obligations include regulatory filings, audits, investor reporting, and compliance monitoring. Offshore fund formation is not a once-off event, but the beginning of a long-term operational commitment that must stand up to scrutiny from regulators and investors alike.

In an environment where capital is increasingly selective, offshore fund structures can provide South African investment managers with the platform they need to compete globally. But the most important decision is not where to domicile a fund – it is who you partner with. Working alongside professionals with deep international legal, tax and operational expertise can mean the difference between a structure that merely exists and one that truly enables sustainable growth.

Cyprus: A strategic residency opportunity your clients should secure

For financial advisers and wealth planners seeking a secure, tax-efficient EU base for their clients, Cyprus presents a compelling and time-sensitive opportunity. As the country moves closer to joining the Schengen Area this year, investor demand for property is accelerating, and the window to secure permanent residency under the current programme is narrowing.

Once Cyprus becomes part of Schengen, the value of its residency status will rise significantly. Permanent residents will enjoy visa-free travel across all Schengen countries, without additional visa procedures. This makes Cyprus not just a Mediterranean lifestyle destination, but a strategic mobility hub for global families. As permanent residency application volumes soar ahead of joining the Schengen, acting now ensures your clients can secure approval on the current program.

A lifestyle that sells itself

Cyprus combines European infrastructure with Mediterranean ease. Your clients gain access to:

• 300+ days of sunshine per year in an English-speaking country

• World-class marinas and golf resorts

• International private schools and modern healthcare facilities

• A low-crime and politically stable environment

• Vibrant coastal cities and charming mountain villages. From sailing along crystal-clear coastlines to hiking in the Troodos Mountains, Cyprus offers yearround outdoor living. This is a rare blend of security, accessibility, and quality of life within the EU.

Financial and legacy planning advantages

Cyprus is particularly attractive from a wealth structuring and succession perspective:

• Zero inheritance tax

• No tax on worldwide dividends for qualifying non-dom residents

• Extensive double tax treaty network

• Favourable legacy planning structures within a respected EU jurisdiction

• Attractive property rental opportunities to earn a Euro-based income.

For high-net-worth families looking to protect assets, simplify succession, and create an EU foothold for future generations, Cyprus provides both flexibility and longterm security.

Inspection trips and broker incentives

To support you and your clients, we offer customised and personalised property inspection trips to Cyprus.

Your clients can view curated property options, meet legal and tax advisors, and gain first-hand insight into the lifestyle before deciding. This structured approach provides clarity and confidence, and we guide your client through every step of the process.

We truly value our broker relationships. Financial advisors and intermediaries benefit from our 18 years’ experience of working with hundreds of South African investors. We work transparently and collaboratively, ensuring you remain central to your client relationship throughout the process.

Why act now?

With Schengen membership imminent, increased regulatory scrutiny and potential changes to the program are expected. Securing residency under the current conditions represents both a financial and strategic advantage. Early movers will benefit most.

If you represent clients seeking:

• European mobility

• asset protection and tax efficiency

• a safe, high-quality lifestyle destination, I invite you to arrange a private consultation to discuss your client’s specific objectives and how Cyprus can align with their broader wealth planning strategy. Let’s explore how we can create a tailored pathway that delivers security, opportunity, and lasting value.

Contact Jenny Ellinas, Founder and CEO. Tel / WhatsApp: +27 83 448 8734 Email: jenny@cypriotrealty.com

By Micaela Paschini Team Lead: Tax Legal at Tax Consulting SA

SARS and offshore investing

On 16 February 2026, the South African Revenue Services (SARS) published updated reporting specifications for Automatic Exchange of Information (AEOI), covering both the OECD’s Common Reporting Standard (CRS) and the United States Foreign Account Tax Compliance Act (FATCA). According to SARS’s updated jurisdiction and currency code appendices, reporting now operates across 253 jurisdictions, and financial reporting can occur in 178 different currencies.

This includes not only traditional ‘countries’, but also smaller financial territories and jurisdictions that have historically been associated with offshore banking, such as Jersey and Guernsey. The message is unmistakable: offshore financial secrecy is over. The publication of the updated specifications, coming into effect on 1 March 2026, reinforces what taxpayers globally have been learning over the past decade: international financial reporting is extensive and no longer limited to a handful of major jurisdictions. It is now global, systematic, and standardised.

Financial institutions worldwide are required to participate in AEOI reporting. South Africa is firmly embedded in this global reporting network, which captures offshore financial interests through structured, automatic information exchange between tax authorities as part of the ongoing fight against tax evasion.

The practical implication is clear: there is no longer any realistic place to hide money in a bank or financial institution without it being reportable somewhere in the global exchange system. This effectively ends the era where offshore bank accounts could be used as secrecy tools. Offshore accounts may still exist, but they are no longer invisible.

A

global reporting net without gaps

AEOI provides for the systematic and periodic transmission of ‘bulk’ taxpayer information between jurisdictions under a common reporting framework. This includes various categories of income, account balances, and information concerning the acquisition of significant assets. Tax authorities use this data to assess the net worth of an individual and check its tax records to verify that taxpayers have accurately reported their foreign-sourced income or assets. In this way, AEOI deters tax evasion and promotes voluntary compliance.

These global initiatives apply across the world as a uniform standard. The CRS framework is designed to ensure reporting consistency, quality, and predictability of information exchanged between tax authorities. It also requires financial institutions to look through certain entities, including trusts and similar arrangements, to identify controlling persons. SARS explains this results in significant opportunities for the resident country to enhance compliance and make optimal use of the information (e.g. through automatic matching with domestic compliance information and data analysis).

“There is no longer any realistic place to hide money in a bank or financial institution without it being reportable somewhere in the global exchange system”

Do not let your wealth become trapped

A major consequence of this global transparency shift is that many offshore structures have become outdated. Wealth could be ‘stuck’ inside legacy structures that were designed for a very different compliance environment. Beneficiaries often hesitate to access funds for fear of triggering tax exposure, a concern that is not unfounded. Moving money from an offshore structure into a personal bank account can result in unexplained wealth, triggering serious questions about source of funds and historic compliance. If not handled correctly, supported properly, and structured in a defensible way, such a transfer can end in unexpected, expensive tax liabilities.

Waiting is not a strategy

For taxpayers with undeclared offshore accounts or legacy offshore structures created in an earlier era of secrecy, the risk landscape has fundamentally shifted. Automatic reporting means relevant information may already be accessible to tax authorities. Proactive engagement with expert advisers is essential. Legacy arrangements should be reviewed and, where necessary, converted into fit-for-purpose structures aligned with today’s compliance standards and the

realities of globally connected families. Offshore wealth itself is not unlawful, but undisclosed offshore wealth and undeclared income are increasingly indefensible.

Local crypto changes to note

If you hold crypto through offshore structures, trade on foreign exchanges, or maintain cross-border interests that have not been properly disclosed, the risk profile has changed materially. SARS has released the final Business Requirement Specifications for the Crypto-Asset Reporting Framework and the enhanced Automatic Exchange of Information regime, effective 1 March 2026. These frameworks integrate crypto transactions and offshore financial data into the same global transparency architecture that already captures traditional banking activity. Crypto-asset service providers must now collect and transmit detailed user and transaction information in a standardised format. Disposals, conversions and transfers form part of an automated reporting system. The expanded exchange regime strengthens cross-border data flows, placing crypto and foreign accounts within a coordinated international framework.

Data matching reshapes audits

The burden of proof remains with the taxpayer. What changes is SARS’s ability to detect discrepancies with precision. Structured transaction-level data enables more accurate reconciliation, faster risk profiling, and targeted audit selection. Taxpayers who assumed multiple wallets or layered structures would reduce traceability should reconsider.

Income or capital: Classification risk

Crypto gains are not automatically capital in nature. Depending on intention and conduct, they may constitute revenue or trigger capital gains tax. With enhanced data access, incorrect classification is more likely to be identified and challenged.

Voluntary disclosure as strategy

Where historic crypto or offshore activity has not been properly declared, a proactive review is advisable. The Voluntary Disclosure Programme allows taxpayers to regularise non-compliance before enforcement begins. Once SARS initiates action using thirdparty data, penalties, interest and disputes become far more likely. Proactive compliance remains the stronger position.

By Caroline Naylor-Renn Chief Operating Officer at

ITwo-pot didn’t stop the retirement savings leak –auto-enrolment might

n South African retirement saving, there was a before September 2024 world and an after. Before, changing jobs was tempting: you could cash out your retirement money. For many, it solved a short-term problem; for most, it damaged retirement outcomes and reset compound growth. It also fed South Africa’s retirement reality – 10X research shows only about 6% can retire financially secure.

Then came the after. On 1 September 2024, the two-pot system arrived – splitting contributions into an accessible ‘Savings’ pot and a restricted ‘Retirement’ pot. But it hasn’t changed behaviour as hoped. The new system delivered some unexpected consequences, which hasn’t stopped the bleeding, only redirected the flow.

By June 2025, National Treasury revealed retirement fund members had withdrawn nearly R57bn through the new access channel, with almost four million withdrawals. By the start of the new tax year in March 2025, 478 000 had withdrawn from their pension a second time. South Africa won’t close its retirement savings gap through messaging alone. Better outcomes depend on system design, which is why auto-enrolment is now on the cards.

In the UK, retirement saving became the default. Autoenrolment began in 2012 for workers aged 22 to State Pension age, earning over £10 000 a year, enrolling them automatically with an opt-out and a legal requirement to re-enrol opt-outs every three years. Over a decade later, more than 22 million people save into a workplace pension, up from fewer than 12 million, with around three-quarters of the workforce now in the system.

That participation came from intentional design: saving is automatic, opting out is the choice. South Africa still relies on voluntary participation. Coverage is low, preservation weak, and many remain on track for inadequate retirement incomes. Treasury positions auto-enrolment as the logical successor to the two-pot framework, arguing that voluntary participation is why roughly 30% of formal-sector workers still do not belong to any retirement fund. Its default regulation framework also pushes funds to set clear defaults so members who do nothing are steered away from valuedestroying choices.

Defaults more important than choice

One of the clearest lessons from the UK is that most auto-enrolled members do not actively tinker with their pensions. They stay in the default fund, at the default contribution rate, often for their entire working lives.

South Africa’s regulations require employer-sponsored funds to offer a default investment portfolio, with rules covering default preservation and default annuity strategies. In practice, most members stay in the default from their first payslip to retirement, which is why it must be structured well. Contributions need to be set – and escalated where possible – to give people a realistic chance to replace a meaningful share of pay. The investment strategy must follow a life-cycle logic: take growth risk when members are young, then reduce risk as retirement approaches. Fees must be aggressively managed, as small annual charges compound into significant losses over a working lifetime.

How it’s working out

The UK phased in auto-enrolment contributions, ending with a minimum total of 8% of qualifying earnings, typically split 5% from the employee and 3% from the employer. Early low rates drew criticism for locking in inadequacy. Assessments show participation has risen sharply, but many workers remain on track for retirement incomes below expectations. This drives a second wave of reform, including powers to lower the minimum age to 18 and remove the lower earnings threshold so contributions start from the first pound earned.

The sequencing was deliberate: get people in first, then address adequacy. In South Africa, high mandated contributions introduced overnight would be politically and economically difficult. A plausible approach is modest contributions with hard-wired escalation over time –linked to wage growth or years of service – reinforced by preservation rules, so adequacy improves gradually.

Changing outcomes

Auto-enrolment has altered the UK pension market structure. The steady inflow of contributions into a simple set of default schemes has driven consolidation, particularly into large multi-employer schemes. These

schemes leverage scale to lower administration and investment fees, often using low-cost index strategies. Over a working life, shaving a percentage point off charges materially increases retirement pots. Australia has pushed this further through its compulsory 12% Superannuation system, creating scale, bargaining power, and disciplined fee oversight.

Default ‘MySuper’ products are tested on net returns. Poor performers are publicly flagged, pressured to improve, merge, or close to new members. Compulsory contributions, scale, and fee discipline have created large retirement asset pools with less value lost to charges.

South Africa has far to go, with many smaller funds and legacy arrangements where costs are high relative to value. Aligning auto-enrolment with stronger standards on charges, governance, and consolidation would allow more members to benefit from institutional pricing and simple, low-cost default portfolios.

Employers must deliver

In both the UK and Australia, the workplace is the main distribution system for retirement saving. UK employers must identify eligible workers, enrol them into a qualifying scheme, pay minimum contributions, and reenrol those who have opted out at three-year intervals. Australian employers must pay into a complying fund for eligible staff, with contributions treated as part of normal remuneration.

South Africa already uses employers as a conduit for retirement saving in the formal sector, but participation is not universal and preservation is weak. Autoenrolment would build on existing payroll infrastructure to extend coverage. A mixed model is possible: employers must enrol eligible staff into a qualifying fund; funds must meet stringent standards on default design, governance and cost; workers can carry their accumulated rights with them as they move between employers. Australia’s experience suggests that once contributions are embedded in the wage bargain and handled routinely through payroll, they become politically and socially ‘normal’.

South Africa’s choice is therefore not between ‘nannying’ workers and respecting their freedom; it is between maintaining a voluntary system that produces weak outcomes, and moving towards autoenrolment that puts the onus of design and execution on institutions. The point isn’t to import a policy. It’s to accept that outcomes are shaped by systems.