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In The Educator, we address a number of topics with the ultimate goal of providing a better understanding of investing clients’ money.

South Africa is a small economy when seen in a global context, with only 0.5% of world GDP according to a Goldman Sachs report. It should therefore not come as a surprise that increasingly, more South Africans have decided to further diversify their investments by investing in global markets.

South African residents are subject to tax on their worldwide income. There is a difference in the way South African residents are taxed when investing locally or when investing abroad

The local Collective Investment Schemes (CIS) industry attracted net annual inflows of R213 billion in 2020 – the highest ever in the 55-year history of the industry. The majority of the flows (86%) went into interest bearing portfolios i.e. money market and income portfolios. This should not come as a surprise as these portfolios have been the best performing ‘asset class’ in the local market over the past three to five years.

In part two of a three-part series we discuss the impact of Capital
Gains Tax (CGT) when calculating the amount you can deduct for
tax purposes. The series of articles focuses on section 11F of the
Income Tax Act, which relates to the deduction of contributions
to retirement funds.

“A regular company makes profit and pays taxes on its entire profit. There-after, the decision is made as to how to
allocate after-tax profits between dividends and reinvestment. A REIT simply distributes all of its profits and gets to skip
the taxation”

When contemplating an investment offshore, before deciding on the type of portfolio and/or platform that will meet your requirements, you need to decide whether you want to invest in a rand-denominated fund or use your foreign allowance.

Since investors rarely behave according to financial and economic theory, behavioural finance has grown over the past twenty years. Most investors know that emotion affects the way in which investment decisions are made – and that greed and fear play a large role in driving investment markets.

In the previous edition of The Educator, we discussed investment vehicles available under the Collective Investment Schemes
Control Act (CISCA). In this edition we briefly introduce wrap funds, also known as “model portfolios”, as an additional investment vehicle for investors to gain exposure to multi-managers.