SOME asset managers are turning away money
destined for rand-denominated offshore funds after the currency’s
weakness resulted in breaches of maximum portfolio allocation rules.
The
rand plunged 45.15% against the dollar in the year to January 26 as
emerging markets experienced sharp capital flight. This has seen certain
portfolios exceed their allowed foreign retail asset allocations that
exchange controls cap at 25% for retirement funds and long-term
insurers.
The controls allow an additional 5% to be invested in African assets, while collective investment schemes may invest up to 35% in foreign assets.
The exchange controls were introduced in an effort to preserve foreign currency reserves.
"The weakness of the rand has meant that our offshore investments have grown disproportionately in rand terms," says Richard Carter, head of product development at Allan Gray.
The controls allow an additional 5% to be invested in African assets, while collective investment schemes may invest up to 35% in foreign assets.
The exchange controls were introduced in an effort to preserve foreign currency reserves.
"The weakness of the rand has meant that our offshore investments have grown disproportionately in rand terms," says Richard Carter, head of product development at Allan Gray.
