Frequently asked Questions?

We have attempted to provide you with answers to number of often asked questions regarding our various portfolios and investment strategies. Should your questions not be answered below please give us a call or email us directly.

Local Portfolio and Investment Questions

PSP investing involves a bespoke investment portfolio in which shares and other securities are held in the client’s name, and are bought and sold on behalf of the individual client by an asset manager. The asset manager will invest directly in the market and will avoid investing through middlemen, like unit trusts.

The annual investment management fee paid by the Client to the Financial Services Provider will amount to 1,5% of the value of the Client’s portfolio calculated at 0,375% of the total market value of the Client’s portfolio at the end of the relevant quarter and paid every calendar quarter in arrears.

No, there is no lock in period. Although it is accepted that investing is for the long term.

It depends on the portfolio. Refer to the factsheets for the various portfolio benchmarks.

Yes, we can manage the portfolios within a retirement wrapper.

Yes, we can manage the portfolios within a pension wrapper.

Yes, you can. Ask your Representative how this will impact your portfolio returns and financial goals.

Global Portfolio and Investment Questions

Our offshore portfolios give clients direct offshore exposure.

Portfolios are kept in the safe custody of our offshore custodians in the name of the client and no funds are ever deposited at Overberg. In the unlikely scenario that Overberg goes bust, the portfolio will be unaffected, and the client can appoint a new manager.

Living annuities cannot be moved abroad and can only be drawn down at a maximum of 17.5% per year, until it reaches a value of R125,000 at which point the whole amount can be withdrawn. Overberg can construct a portfolio that will mimic returns on global asset classes and to hedge the Rand.

Clients have online access to view their global portfolios 24/7. Overberg reports to clients on a quarterly basis with in-depth feedback and analysis on current and expected market conditions.

You can take a maximum of R10 million a year offshore if you have been granted a SARS tax clearance certificate to move money abroad. Without this tax clearance certificate, you can only send a maximum of R1 million out of South Africa into your foreign bank account each year. Contact one of our consultants for more information.

In the past few years, South African investors have maximised their offshore investments utilising their R1m a year discretionary travel allowance. At a total asset value, most South Africans have the majority of their assets in South Africa and it is prudent to diversify that asset base as much as possible up to a third offshore. The recommended starting offshore portfolio is GBP50,000, but smaller portfolios can be accommodated which will then grow over time.

Overberg has been running the global investment strategy since the company’s inception in 2001, consistently outperforming the benchmark across market cycles. The strategy is well proven over different time periods, showing superior absolute and risk adjusted investment returns.

The annual asset management fee is 1.5% of the value of the client’s portfolio calculated at 0.375% of the total market value of the client’s portfolio at the end of the quarter and paid every calendar quarter in arrears. The fee is competitive versus the average unit trust and contains no additional performance fee.

While the portfolios reside overseas in the safe custody of UK based stock broking firms, the research and portfolio management process occur at the offices of Overberg in South Africa. Clients have the comfort and convenience of dealing with asset managers who are based locally rather than overseas.

The portfolios comprise an optimally diversified mix of investment trust companies listed on the London Stock Exchange (LSE). There are hundreds of investment trust companies listed on the LSE, with various mandates and areas of specialisation, representing the world’s different economies and currencies. Investment trust companies are priced in sterling but depending on their specialisation the underlying exposure may be to one of the world’s other major or emerging market currencies.

The portfolios comprise an optimally diversified mix of investment trust companies listed on the London Stock Exchange (LSE). There are hundreds of investment trust companies listed on the LSE, with various mandates and areas of specialisation, representing the major asset classes, including equities, bonds and property. Overberg’s global private share portfolios are optimally diversified across these asset classes in order to maximise potential investment returns with the minimum amount of risk.

Through listed investment trust companies, OAM’s global private share portfolios can gain exposure to alternative asset classes including private equity, infrastructure, renewable energy, absolute return strategies, gold bullion, and even more esoteric asset classes such as music royalties. These alternative asset classes are relatively undiscovered, thereby providing more attractive returns. In addition, due to their low and sometimes negative correlation with equity markets, they provide an effective means of reducing portfolio risk and ensuring greater stability of returns.

The quick answer is not less than five years. The longer your investment horizon, the better – it is not the timing of the market, but time in the market that is important. Some years will be better than others – investments never grow in a straight line. You are safer inside the market than outside the market. Allow your investment to grow through the power of compounding. Never interrupt the power of compounding.

Funds can be accessed at any time. When you need funds, we can repatriate it to SA within around 10 days.

You can donate funds. The first R100,000.00 (per year) of donations are not taxed – it is called the “Annual Exclusion”. Donations of more than R100,000.00 (per year) attract Donations Tax. The current rate is 20%.

Residents are taxed on their worldwide income, subject to certain exclusions. Foreign taxes on that income are allowed as a credit against South African tax payable.

Three taxes apply to your investment:

(1) Tax on Interest Received,

(2) Tax on Dividends Received and

(3) Capital Gains Tax.

The following rates and exemptions apply to natural persons. These are the current rates.
Companies and Trusts are taxed differently.

Interest received:

  • Interest received on foreign investments is fully taxable.

Dividends received:

  • Dividends are taxable at a maximum effective rate of 20% via the normal tax system (not dividends tax).
    No deductions are allowed for expenditure incurred to produce foreign dividends.

Capital Gains Tax (CGT): The calculation is somewhat complicated

  • The first R40,000.00 of a Capital Gain is not taxed – it is called an “Annual Exclusion”.
  • The balance of the Capital Gain is taxed on a sliding scale. The maximum Tax Rate is 18%.

Questions around Pensions, Retirement and Financial Advice

Overberg provides a range of wealth management advice and services to clients with an interest in, or a wish to establish, a non-resident (of South Africa) trust, corporation and/or retirement plan.

An overseas investment structure may be a useful lifestyle, consolidation and/or tax planning mechanism for a variety of asset types ranging from investment property to listed or unlisted equity. The benefits of utilising such a structure can include asset protection, tax-deferral and succession planning.

Whether investing with Overberg directly via a custodian platform or through such a structure, your capital is invested with the underlying Investment Companies and managed by Overberg.

Overberg works with a small stable of specialist corporate trust and fiduciary service providers and corporate administrators that have strong management teams and reputations. We only work with institutions that ensure that a clients’ assets are ring-fenced and segregated from those assets of the company; meaning that our client’s investments are protected in the unlikely event of default by a corporate fiduciary services provider or administrator.

Overberg specialises in the management of private share portfolios and are proud to offer wealth management capabilities as an additional service at a steep discount to what we see in the marketplace.

Whilst any fee erodes real returns, we can successfully demonstrate the added value achieved by high net worth investors and entrepreneurs through combining investment structures with our asset management expertise, leading to the most cost-effective solutions.

Situs tax is often unknown or largely ignored by South African’s investing internationally. Direct investment, such as shares, in the UK and USA can lead to a 40% inheritance tax, on death. An individual with a portfolio in the USA in excess of $60,000 and/or a portfolio in the UK in excess of £325,000 will be subject to a 40% inheritance tax, in those countries, on death.

Certain exceptions and additional allowances exist for couples that are married or in civil partnerships. Our representatives can review your current (or project a future potential) situs tax exposure and, if appropriate, can recommend an investment structure which can help mitigate situs tax.

If you are earning more than R1.25 million per annum, living and working overseas as of 1 March 2020, you may have to pay tax of up to 45% on your employment income to SARS. There are various nuances regarding double taxation agreements, potential tax relief and residency issues. Our representatives can assist you to better understand your position and as to whether you should consider the use of use of a foreign investment structure or even the formal emigration process.

Yes, South Africa has both a residency and ordinarily resident based assessment system to determine whether or not an individual is a South African tax-resident and our representatives are well-versed with advising foreign nationals and ‘expats’ living in South Africa on such matters. A South African tax-resident is subjected to local taxation on their worldwide income and gains.

Yes, your Overberg representative can help you better understand the merits of this decision, as well as the associated costs and tax considerations.

The suitability depends on your unique circumstances which our team will consider, along with your objectives prior to providing any advice. Our team have experience with Mauritius, Guernsey, Jersey, Isle of Man, Malta, Gibraltar, Switzerland and Singapore.

Whether you choose to or not, the correct foreign structure can provide you with the peace of mind that your money can be safely and legally separate from a South African balance-sheet. Planning in advance with your representative can ensure the maximum flexibility. Our team have experience with the formal emigration process as well as cross-border tax considerations for popular ‘retirement destination’ countries such as the UK, Spain, Portugal, Mauritius and Australia.