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News April 2013

 

Possibly the last opportunity to diversify

 

Many clients who are invested in Pension, Retirement Annuities and Preservation Funds are over weighted in that major asset class of equities and cannot rebalance their portfolios in order to be properly diversified into the three major asset classes, namely South African Equities, South African Alternative Funds (Hedge Fund of Funds) and Offshore Fund of Funds, as the Pension Fund Act does not allow that type of diversification.

 

Clients who are in preservation funds and who are over weighted in the main asset class of Equities, still have the opportunity to do a total or partial once off surrender in order to enable them to diversify properly. There will be tax implications, but we have calculated that even taking tax into account the client will most likely be better off within the next ten years if he diversified the surrendered amount to a quality South African Hedge Fund of fund, or Offshore Fund of fund. When you start to draw pension for an income from these funds you will be even better of as this income will in most cases, as the tax act stands now, be tax free, where as the income from a pension fund is fully taxable.

 

The opportunity to cash in preservation funds are only available until age 65 or until legislation prohibits it, which might come sooner than later. Clients who would like to diversify should contact us or their private brokers, as soon as possible for the necessary assistance.

 

Small Top-Ups into KFHF allowed

 

The minimum amount one is allowed to invest into Kanaan Fund of Hedge Funds (KFHF) is R100 000 and an existing KFHF client is allowed to make contributions to their investments, as small as R10 000, which we encourage clients to do, as there is a possibility that new legislation will make the minimum R1 million, as previously mentioned.

 

Kanaan Trust

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