At the Raging Bull Awards gala dinner at the Cape Town International Convention Centre last week, the second major company award was for unit trust companies that are domiciled offshore and whose funds are approved by the Financial Sector Conduct Authority (FSCA) to be marketed to South African investors.
The Raging Bull Award for Offshore Manager of the Year (for performance to the end of 2019) went to Nedgroup Investments. It was the fifth year in a row that Nedgroup has walked away with the offshore manager award.
Nedgroup Investments's offshore funds are constituted as UCITS funds domiciled in Ireland (see below). The offshore arm of the company had three qualifying funds: the Global Equity Fund, which earned five PlexCrowns, and two multi-asset funds: the Global Flexible Fund (three PlexCrowns) and Global Cautious Fund (three PlexCrowns). The manager's overall rating was four PlexCrowns.
Coronation Global, with 3.667 PlexCrowns across five qualifying funds, and Schroders (3.667 PlexCrowns across four funds) tied for second place in the offshore company rankings.
Offshore funds differ from local funds that invest offshore, which are denominated in rands and are included under the domestic unit trust sub-categories. Offshore funds are denominated in currencies such as United States dollars and they invest globally or in specific overseas markets, such as the United States or the Eurozone.
Many South African asset managers have bases offshore where they manage such funds. International managers that are permitted to market their funds in South Africa also qualify for the award if they meet certain criteria.
The funds themselves are subject to the regulatory requirements of the jurisdictions in which they operate. However, the funds must be approved by the Financial Sector Conduct Authority, and be aligned with the FSCA's regulatory standards.
Funds domiciled in Europe are known as UCITS funds. UCITS, which stands for the Undertakings for the Collective Investment of Transferable Securities, is, according to Investopedia, a regulatory framework of the European Commission that creates a harmonised regime throughout Europe for the management and sale of mutual funds (known in South Africa as unit trust funds).
Note that funds offered by offshore-domiciled companies require you to move money offshore, so your investments are subject to South African exchange control regulations and the South African tax regime that applies to offshore investments.