Important Announcement from Allan Gray Equity Fund Unit Trusts

Equity-Fund-changes-NorthwoodWhen an important financial player such as Allan Gray announces a sweeping policy change to their Equity Fund unit trusts, it is usually a good idea to pay attention.  So what are these changes?  And furthermore, why have these changes been made?


The primary change to concern yourself with if you’re an investor in Allan Gray’s Equity Fund is the decision taken by the financial firm to invest a greater percentage of their funds offshore.  But Why? And is this a good thing?

Essentially, the logic behind the step is that the South African JSE has shrunk in recent times as more and more companies move offshore.  This departure of firms from South African shores has begun to restrict the financial manoeuvrability of Allan Gray’s various portfolio managers on the JSE in terms of a limited number of viable investment options.  Furthermore, the exodus of firms from South Africa has coincided with a slump in the South African economy, which has rendered our economy unfavourable when compared to some of our offshore trading partners.

Allan Gray’s primary duty is to grow the investments made by individuals into their Equity Fund and, to effectively do this, Allan Gray feels that it must diversify its investment options by investing a greater share of their fund offshore.  This is therefore simply a logical step towards maximizing the growth experienced by their Equity Fund and ensuring profits for their investors.

Is it a Wise Move?

In the context of South Africa’s current economy, this move towards offshore investments looks extremely wise.  The various portfolio managers of Allan Gray’s Equity Fund value investment flexibility and diversity above all else, which, for the most part, can no longer be found on the JSE.  At the moment, the JSE is volatile to say the least and the prior level of investment by Allan Gray on the JSE posed a consistently greater risk to their respective investors.  Thus, the move to invest a greater percentage of funds offshore is simply a step towards risk reduction.   It’s important to note that the majority of investors in Allan Gray’s Equity Fund unit trusts have chosen to invest in that form of investment not out of the promise of explosive profits, but rather as a long term means to safely and consistently grow their wealth.  In light of this fact, it makes perfect sense that Allan Gray is looking to make greater use of the more stable markets abroad.

In conclusion, in light of the current plight of the South African economy, the increased volatility of the JSE and the stable nature of Allan Gray’s Equity Fund unit trusts, the decision by Allan Gray to invest a greater portion of their equity fund offshore can only be seen as a wise move.  There can simply be no denying that this change in policy has been done with the investor’s best interests at heart with investment risk reduction the sole aim. It’s important to remember that firms such as Allan Gray will always prioritise the interests of their respective investors over any other variable with this offshore policy shift proving to be no different.

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