Key Facts
- —The country South Africa has about 63 million people and Africa’s most industrialised economy, worth more than US$400 billion, similar to Denmark’s. It hosts Africa’s largest stock exchange in Johannesburg.
- —Why it matters Its retirement industry is the continent’s biggest. Pension funds manage about R5.8 trillion (about US$348 billion), so how they spread risk shapes savings, the rand and local markets.
- —Why now Speakers at two Cape Town conferences said traditional diversification has stopped working. The hosts were the Institute of Retirement Funds Africa (IRFA) and research firm Morningstar.
- —What happened Over the weekend of 3 and 4 October 2026, News24 reported that managers no longer trust a bonds-and-equities or developed-and-emerging split to protect savers.
- —Who is involved Fund trustees, asset managers and National Treasury. Treasury sets Regulation 28, the rule capping how much funds hold in each asset type.
- —What it means for you Holders of South African retirement funds should expect more real assets, private markets and offshore holdings. The foreign limit is 45 percent.
- —Still open Whether Treasury changes Regulation 28 or adds incentives for local infrastructure. No proposal has been published, and managers warn against forcing money home.
South Africa’s money managers say the classic stocks-and-bonds mix no longer protects savers. They are rethinking where Africa’s largest pool of retirement money should go.
South African fund managers say the old rules of diversification no longer protect retirement savers. Speakers at two investment conferences in Cape Town warned that a simple split between bonds and equities has stopped doing its job.
South Africa is Africa’s most industrialised economy and has the continent’s biggest pension industry. News24, a leading South African news site, reported the warnings over the weekend of 3 and 4 October 2026.
Who said what
The Institute of Retirement Funds Africa (IRFA), the industry body for pension fund trustees, hosted one conference.
Morningstar, a US investment research firm, hosted the other. Both events took place in Cape Town.
According to News24, speakers said investors can no longer rely on spreading money between bonds and equities. Splitting money between developed and emerging markets no longer offers the same protection either.
Their reason is a more fragmented world with more volatile markets. When inflation or a political shock hits, assets that once moved in opposite directions now often fall together.
Why the old rules stopped working
For decades, government bonds tended to rise when shares fell. That pattern made a mix of the two the default for pension funds worldwide.
The pattern broke in 2022, when inflation surged and both shares and bonds lost value in the same year. Managers now argue that higher structural inflation and large government deficits make such shocks more likely.
Geopolitics adds a second layer. Rivalry between the United States and China, sanctions and trade curbs push companies to duplicate supply chains along political lines.
That can make shocks travel across countries at the same time. A portfolio spread across many markets may therefore be less diversified than it looks on paper.
A large pool of savings with limited room at home
South Africa’s savings industry is large for an economy of its size.
Pension funds manage about R5.8 trillion (about US$348 billion), roughly 64 percent of gross domestic product. Makole Mupita of Mahlako Financial Services gave that figure in Business Day in August.
Rand figures here use about R16.66 per US dollar, the closing rate on Friday 2 October 2026.
The domestic market is small by comparison.
South Africa makes up well under 1 percent of the main global share indices. Its stock exchange leans heavily on mining, banking and a few large groups.
That is why managers stress offshore freedom. A fund that keeps most money at home is heavily exposed to the rand, local politics and a narrow set of industries.
The rules that govern the money
South African retirement funds operate under Regulation 28 of the Pension Funds Act. The rule caps how much a fund may hold in each type of asset.
The February 2022 budget raised the offshore limit to 45 percent of a fund’s assets. Before that, funds could invest 30 percent abroad, plus another 10 percent elsewhere in Africa.
Politicians and some economists want more of this money to finance roads, power and water at home. Managers reply that trustees owe a duty to members, not to government projects.
Forcing more money into domestic assets could increase concentration risk rather than reduce it. That tension runs through the current debate on how to fund South Africa’s infrastructure.
Real assets move to the centre
The new thinking gives a bigger role to infrastructure, commodities, property and private markets. These assets respond to inflation and interest rates differently from listed shares and government bonds.
Speakers argued that portfolios should be built around economic drivers rather than labels. That means asking how each holding reacts to inflation, interest rates, liquidity needs and political risk.
Private markets bring their own problem. They are hard to sell quickly, which tests funds that must pay pensions and handle withdrawals on time.
South Africa’s two-pot retirement system, launched in September 2024, lets members withdraw part of their savings each year. That makes liquidity planning more important for trustees.
What it means for foreign readers
The shift matters to foreign investors because South African pension money is among the largest buyers of local bonds and shares. Changes in how it is allocated move the rand and local prices.
Foreigners with South African retirement annuities or unit trusts should expect more real assets and offshore holdings in their funds. Fees and liquidity terms on private-market products deserve a careful look.
Readers following how geopolitics redirects capital across the continent can find more context in Africa: The New Scramble.
What to watch next
The key question is whether National Treasury changes Regulation 28 or adds incentives for local infrastructure. No such proposal has been published so far.
South African fund managers will also watch whether inflation and interest rates settle. If shocks keep arriving together, the shift away from the classic portfolio is likely to deepen.
Frequently Asked Questions
Why do fund managers in South Africa say diversification has stopped working?
They argue that bonds and equities now often fall together when inflation or geopolitical shocks hit. A simple split no longer cushions losses.
How much money do South African pension funds manage?
About R5.8 trillion (about US$348 billion), roughly 64 percent of gross domestic product. Fund principal Makole Mupita cited the figure in Business Day in August 2026.
How much can South African retirement funds invest abroad?
Up to 45 percent of their assets under Regulation 28. The limit was raised to that level in the February 2022 budget.
What are managers adding instead?
Real assets such as infrastructure, commodities, property and private markets. These react differently to inflation and interest rates than listed shares and bonds.
Connected Coverage
Sources
- News24: Diversification as we knew it is dead, SA fund managers warn (3 Oct 2026)
- Business Day: Makole Mupita on South Africa’s infrastructure funding gap (18 Aug 2026)
- IOL Business Report: The sovereign squeeze (6 Jul 2026)
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief
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