Magnus Heystek: I love my country but I love my financial freedom more

Key Topics:

• Offshore investing reduces emigration by giving HNWIs global financial security
• JSE decline and political risks drive capital outflows to global markets
• Offshore portfolios boost wealth growth while lowering long-term investment risks

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By Magnus Heystek

THERE still seems to be the view, misplaced in my opinion, that people (and their advisors) who make use of the annual offshore allowance and invest their money offshore are negative pessimists who hate their country. Disloyal to the flag.

I would have thought that after more than a decade of increased offshore flows—reportedly to be almost R1,5 trillion over the past ten years , this debate would have by now died a quiet death.

Not so, it seems, judging from a recent article in Business Day (17th September 2025: JSE powers ahead, leaving pessimists in its wake), written by long-standing columnist Dr Stuart Theobald, chairman of Krutham, formerly known as Intellidex. He again takes a swipe at investors and their advisors who make use of their annual allowances (R1m Single Discretionary and R10m Authorized International Transfer) in order to invest offshore, most probably on global investment platforms or to buy property in another country.

This is not the first time that Dr Theobald, who generally writes a well-balanced and erudite column, has had a go at this issue, venting his spleen at anyone daring not to invest on the Johannesburg Stock Exchange (JSE).

In April 2021, Theobald had the following to say in his column: “So next time the ‘anywhere but SA’ bandwagon comes charging past, see if for it as it is: a creaking wreck filled with those who make a living selling the negative story”.

At the time I wrote a comment on BD as well as Biznews, that he should have declared a vested interest: the JSE was a client of his company. I don’t know if this is still the case. I also said the “negative story” was fully justified, as investment returns on global markets had been substantially better than the JSE for almost 10 years at that time.

After all—as I said—investment advisors should be offering their clients the “best of breed” investment advice, even if it means taking the money out of the country.

I don’t think the general investment community in SA has paid any heed to his warnings and exhortations.  Even before 2021 local investors have been moving substantial amounts of money offshore annually, with no or a very small appetite for local investments.  And this has continued unabated ever since…

Whatever the JSE could offer, investors could get elsewhere and much more, such as exposure to the Magnificent 7, for instance.

In fact, based on Krutham’s own research,* High Net Worth Investors (HNWI’s) have an average 64% of their portfolio offshore, either directly or via asset swap funds, largely by-passing the JSE as a conduit or any of the local asset managers, who have been battling the same phenomenon: an outflow of capital to offshore markets.

This loss of business must be irking Theobald, on behalf of his client.

At the same time the number of listed companies on the JSE continued its downward trend, offering less and less variety and therefore less choice.

In 2000 the JSE had 650 listed companies, today the number has dwindled down to less than 300, with announcements of delistings happening almost weekly.

In his latest article (BD article, 4th September 2025), he again describes any investor/advisor who takes money offshore as peddlers in pessimism, but goes one step further: he equates advice on offshore investing with emigration services, both evil in his eyes.

A bit rich, coming from someone who has emigrated himself.

OFFSHORE INVESTING CREATES UNPARALLELED PERSONAL FREEDOM

This is where Theobald is wrong and is misreading the room, as they say.

The ability to legally take money offshore and create an offshore portfolio is actually leading to a reduction in emigration amongst HNWI’s.

I have many clients in our business—who openly admit that the ability to externalize some (or in some cases all of their liquid capital) has reduced and in some cases removed the need to emigrate.

They can stay in SA, with all that it offers, with their family, friends, and professional networks( which you can’t replace easily elsewhere) whilst their capital is offshore, safe from an ANC/EFF/MK-alliance which might (as many have threatened in the past) to remove the offshore investment allowance.

I mentioned these facts during my talk at the recent Biznews Investment Conference in Hermanus two weeks ago.

Local investors can now invest—at the click of a computer or a tap on the phone—in funds such as the Orbis Japan Equity, Ranmore Global Equity, or Han-Gins Itek MegaTech funds, for example, all funds that have beaten the JSE substantially over 10 years and even over the past year.

I have personally guided several investors in creating R100m+  offshore portfolios from an initial investment of R10m or so since I forcefully started recommending offshore investments as from 2012 onwards.. What they want today is the best investment they can find anywhere in the world at the lowest level of risk.

CONFESSIONS IN AN ADVISOR’S OFFICE

He needs to sit in my office for a week or two, eavesdropping on the conversations I have with clients.

Let me summarize what he will hear:

1. They hate the ANC and what it is doing to this country and its wealth, and they will do whatever they can to protect themselves and their families from the economic and political carnage inflicted by the corrupt politicians in power..

2. If they are going to invest in SA, it will be somewhere in the Western Cape.

3 They cannot sell their residential and commercial properties outside of the Western Cape. Residential home prices in many cases have shown zero growth over 10 years and more.

4. One or more of their children are living offshore. By creating an offshore portfolio now it solves future  problems of  the winding up of estates in SA, a very common occurrence.

5. People are also creating offshore portfolios, should they decide to emigrate one day.

6. Their compulsory investments are all in SA, so any discretionary money will find its way offshore

7. The political situation in SA remains with the collapse of the GNU, something that cannot be excluded or denied. Their offshore money must protect them against a possible ANC/EFF/MK alliance. Who says it cannot happen?

The MK and EFF election manifestos both state clearly that should they gain power, these offshore allowances will be scrapped, and legislation will be introduced to force investors to bring them back.

From  my perspective, I disagree strongly with Theobald for the following reasons:

1. The offshore allowance is just that: an allowance. It can be removed at the stroke of a pen. Use it or lose it.
2. There has been no adjustment in the rand values of the offshore allowance over ten years. In reality,  the dollar values has about halved.
3. In the meantime the price of offshore assets, particularly property, has increased substantially meaning we are still getting poorer on a global basis every year.
4. Many companies on the JSE are operating in a risky and dangerous environment. He totally ignores this aspect. Global investing reduces your risk.
5. The welcome rally on the JSE over the past year has been driven almost solely by the massive bull run in gold—the best year in over 40 years—and the surge in the price of Naspers/Prosus, which makes up almost 20% of the JSE. The rest of the market—rereferred to as SA Inc has not moved much.The ability to invest client money on a global basis has been an extremely liberating and exciting venture. I have not only experienced a substantial increase in the net wealth of my client’s base but have done it at a much lower risk. Isn’t that the ultimate objective of investment advice?

• In the most recent Krutham Banking and Wealth Advisory Survey, it was revealed that HNWI’s have on average 64% of their total wealth offshore.

*Magnus Heystek is investment director at Brenthurst Wealth. Twice winner of the Krutham Best Investment Boutique of the Year (2017 and 2020)