Page 142 - Profile's Unit Trusts and Collective Investments 2021 issue 2

CHAPTER 8

Fund Classification
WORLDWIDE
REGIONAL
GLOBAL
Assets) SOUTH AFRICAN Invest in South African Invest at least 80% Invest at least 80% of
TIER of their assets in South (complete flexibility, up to of their assets outside South Africa, in a specific
Invest at least 60% of
and/or foreign markets
their assets outside
African investments.
of South Africa
(Domicile plus an additional 10% in (including Africa) other
1st Max 30% outside SA 100% either way) geographical region
than South Africa
Africa outside of SA
TIER Allocation) stock exchanges, depending equity, interest bearing and INTEREST BEARING Listed property shares on
REAL ESTATE
EQUITY
MULTI ASSET
Invests in a combination of
Listed shares on various
Bonds, money market
local and overseas stock
instruments and other
2nd (Asset on 1st tier classification listed real estate assets interest-bearing securities exchanges

Funds Funds Funds Funds
General Flexible Variable Term General
Large Cap High Equity Short Term
TIER (Focus) Mid & Small Cap Medium Equity Money Market
Resource
3rd Financial Low Equity
Income
Industrial
Target Date
Africa
Unclassified

Many permutations are possible across first and second tiers
(eg, SA - Equity, Global - Equity, Worldwide - Multi Asset, Regional - Equity, etc).
Third tier classifications are specific to Equity, Multi Asset, Interest Bearing and Real Estate.

South African Funds (previously called Domestic funds) are funds that have at least 60% of
their assets invested in South African markets at all times. They may invest up to 30% of assets
outside SA plus a further 10% in the rest of Africa.
Worldwide Funds are funds which invest in both South African and foreign markets. These
funds have total flexibility as to where they invest – they can have 100% of their assets offshore, or
100% in South Africa, or any mix in between, depending on their view of local and overseas
markets, the rand and other factors. (For the record, a minimum of 15% each way was required
prior to 2003, and a minimum of 30% each way until June 2005.) Some management companies
offer investors the option of investing in worldwide funds while they are waiting for space in a
capped global fund, on the understanding that as soon as there is capacity in the global fund the
investment will be switched.
Global Funds (previously known as Foreign funds)are funds that invest at least 80% of their
assets (previously 85%) outside South Africa at all times. No more than 80% of the assets may be
invested in any one geographic region.
Given the exchange control regulations still in place in South Africa, how, you may well ask, do
local unit trusts invest offshore? Up until February 2001, this was achieved via an asset swap
mechanism, whereby local unit trust management companies were permitted to swap a parcel of
SA assets (up to 15% or 20% of their total assets under management) with an offshore parcel.

140 Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts