SEC’s new foreign investment rules could fuel speculation –  experts warn   

Industry experts have criticised the Securities and Exchange Commission’s (SEC) new regulation which caps foreign investments for fund managers, warning that while the move could offer short-term relief for the cedi, it will be counterproductive for long-term economic health and risks eroding pension funds.

The analysts stressed that inability to invest in global asset classes leaves fund managers’ portfolios undiversified and overly-exposed to domestic macroeconomic risks, including currency depreciation which has historically eroded real returns when measured in dollar terms.

SEC new regulation

Effective February 4, 2026, fund managers licenced to invest locally are now restricted from investing more than 20 percent of their funds under management in foreign assets. Those that were previously authorised to invest 100 percent in foreign securities must now cap their foreign investments at 70 percent, requiring at least 30 percent of assets be retained and invested in country.

The new guidelines, which tighten the limits on how much fund managers can allocate to foreign assets, according to SEC are designed to stem capital outflow and support the local currency. However, investment professionals argue that the policy restricts portfolio diversification and could fuel speculative behaviour in the long run.

Speaking to Business and Financial Times (B&FT) on condition of anonymity, a senior asset manager with extensive experience in foreign investments – especially in the U.S. market – described the policy intervention as a short-sighted solution to a structural problem.

“I don’t think that is the most effective way to stabilise our currency. It may work short-term, but long-term it does not. The most effective way to actually stabilise our currency is by industrialising our economy long-term and reducing our dependence on importation,” the asset manager stated.

Temporary currency stability

The fund manager argued that while the restriction might prop up the cedi temporarily by reducing demand for foreign currency, the unresolved structural economic issues – including heavy reliance on imports – will continue to exert pressure on the exchange rate regardless of investment restrictions.

“I think that short-term it may seem to be working, propping up the cedi, but I don’t think long-term it is going to be very effective,” he added, suggesting the policy could backfire and fuel speculation. The source argued that allowing capital to flow out also facilitates creation of wealth which will eventually return to the local economy, citing Ghana’s peers with more liberal foreign investments regulations.

“I know South Africa has a higher allocation for foreign investments. Their pension industry can actually invest up to 45 or 50 percent abroad. I think Kenya is also the same and Nigeria as of now,” the source noted. “The companies that are doing those services (like Google or Apple), we should be allowed to invest in them. The only way we can benefit fully is to invest in the companies as well.”

‘Disservice’ to young investors

The source further noted that due to the domestic capital market’s shallow nature, forcing institutional investors to concentrate pension funds in government securities won’t yield any benefit.

“My financial responsibility is to members of the pension or investors on whose behalf I’m investing. That’s my primary responsibility. If the funds are not invested in the right asset classes for the assets to grow, for the person to achieve their investment goals, then I’m not doing my job well,” the fund manager noted.

The source argued that this policy fails to account for the age and risk of individual  investors classes. Therefore, the he suggested a significant portion of pension funds – especially that of young investors – could be put in foreign assets with great long-term yield, while older investors’ funds are put in government securities, since they are in a “spending mode”.

“For young people that have another 30 to 40 years before retirement, there’s no reason why they should be allocated to government securities. They don’t need the income right now. Restricting investing for especially the younger generation to invest only 20 percent outside, I think it’s going to be a disservice to that class of investors when they are actually  ready to retire,” the industry expert explained.

Risk of speculation

The industry insider further cautioned that stringent capital controls often create  incentives for nefarious activities in the market by fuelling black market activity which could potentially undermine the very stability SEC seeks to achieve.

“If the right channels have a lot of restrictions, it will disincentivise people from using the banking system. If there’s no restrictions and you know that you can always get access to foreign currency, there’s no incentive to hoard. But if you’re not sure when you’re going to get some next, that’s when people actually feel like the little you have, you try to hide it or hoard it,” the source explained.

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