Collective investment schemes (CIS), regulated under the Collective Investment Schemes Control Act, 2002, are subject to Board Notice 90 of 2014 (BN90).  BN 90 prescribes the type of securities and assets, or particular classes of securities or assets that a CIS in securities may invest in and the limits applicable to such investment.

On 6 March 2023, the Financial Sector Conduct Authority (FSCA) published a Draft Notice of Amendment of Board Notice 90 of 2014 (Draft Amendment) under sections 40, 45(a)(ii) and (b)(ii), 46 and 85 of the Collective Investments Schemes Controls Act, 2002 read with section 301(3) of the Financial Sector Regulation Act, 2017.

The Draft Amendment is the first step in the FSCA’s holistic review of investment guidelines and limits applicable to CISs.  The table below provides a summary of the draft amendments, and the reasoning behind them.

Allow for investment into actively managed exchange traded funds (ETFs);  Currently CISs are able to invest only in index tracking ETFs.  The proposed inclusion of actively managed ETFs, seeks to expand the ambit of permissible investments.  
Allow for the inclusion of hedge funds, where these  are approved to be managed in accordance with the Pension Funds Act Regulation 28;  Although pension funds are permitted to invest in retail hedge funds, subject to a limit prescribed in Regulation 28 of the Pension Fund Regulations, a CIS in securities is not. The proposed amendment seeks to align the investment position.
Increase the current 20% maximum exposure in an underlying portfolio, to 45%, where the underlying portfolio is a foreign CIS.  The South African Reserve Bank, in Exchange Control Circular No. 10/2022, has increased prudential limits for offshore exposure to 45%.  The 20% limit per underlying portfolio is to be increased to 45% to align the investment position.  

The proposed changes are provided in the Draft Notice of Amendment of Board Notice 90 of 2014 and submissions on the draft amendments may be submitted in writing on or before 21 April 2023 to the FSCA, at