Alternative Investment Strategies for HNWIs in South Africa (2025)

Global elites and sophisticated investors look beyond equities and bonds to enhance returns, reduce correlation, and navigate inflation. Recent insights show that structured alternatives can:

Improve portfolio Sharpe ratios by ~0.3–0.5 using a modest 10–20% allocation.

Deliver private equity returns averaging 12–15% p.a. over a 10-year horizon.

For South Africans, alternatives offer inflation protection, global access, and diversification beyond the rand and local markets.

Regulation 28 now permits up to 45% offshore exposure in retirement funds— a game-changer allowing trustees to allocate meaningfully to global alternatives like PE and hedge funds.Note: Crypto remains prohibited in Reg 28 portfolios.

While RAs and pension funds often limit choices, direct private investing or offshore vehicles provide a broader canvas for HNWIs.

Ranges from VC start-ups to buyout funds.

Global returns: ~12–15% net over 10+ years (Cambridge PE Index).

Pros: Asymmetric upside.

Considerations: Illiquidity, long hold periods.

Early-stage, high-growth upside.

Higher risk but potential for 30–40% IRR in select cases.

Mitigate risks via experienced fund managers.

Strategies like long/short equity, global macro, multi-strategy.

Aim for uncorrelated returns and drawdown protection.

Assets like toll roads, renewables, logistics.

Often yield 5–8% plus inflation-linked growth.

Lower volatility than equities.

Direct lending to mid-market firms or real estate projects.

Yields often exceed 8%, usually secured.

Art, classic cars, wine, rare metals.

Unique upside but require specialist valuation and insurance.

Alternative investments may qualify as "financial products" under FSCA and FAIS regulations—verify provider licensing.

In SA, most alternatives are taxed via standard income, dividends, or CGT rules. Offshore products comply via CRS and should be properly declared.

Retirement fund allocations leverage Reg 28’s offshore allowance.

Ideal for HNWI clients who:

Have ample investable capital and risk tolerance.

Seek portfolio diversification with private market exposure.

Can afford capital lock-ins and uncertain short-term valuations.

Want inflation hedges and global growth exposure.

At Vereles Wealth, we provide:

Co-Investment access to global PE and infrastructure.

Manager screening on governance, track record, alignment.

Tax-efficient structures, often via offshore vehicles or Reg 28 wrappers.

Financial modeling around liability matching, stress testing, and reporting.

The information provided in this publication is for educational and informational purposes only and does not constitute financial, investment, tax, legal, or other professional advice. While every effort has been made to ensure the accuracy of information at the time of publication, Vereles Wealth makes no representation or warranty, express or implied, regarding its completeness, reliability, or suitability for any purpose.

Nothing contained herein should be relied upon as a substitute for independent professional advice. All investment and financial decisions should be made in consultation with a licensed Financial Services Provider (FSP) or other qualified advisor, taking into account your individual objectives, financial situation, and needs.

Vereles Wealth, its directors, officers, and affiliates accept no liability for any loss, damage, or expense of any nature whatsoever arising from reliance on the information provided. Past performance is not necessarily indicative of future results.