Offshore Investment ETF

[TheGuy]

Hi Guys

I'm looking at investing monthly through for example PSG online in for example Deutsche Banks Offshore ETFs.

So I was wondering if something where to happen to SA or PSG will my investment still be safe?

 

[russellO]

subscribed.. I'm pretty interested to know as well.

 

[proxilin]

How I've understood it is that, with an ETF (exchange traded fund), you are actually buying the underlying shares (woolworths/sasol/etc). So even though Satrix or Standard Bank or PSG (whoever you buy it through) goes bankrupt, you still own the actual shares and their value doesn't drop.

With ETN (exhange traded notes) you are buying a product of a bank or financial institution, so if they go under, you loose the product. If Standard Bank has an ETN for Gold, you will loose it if Standard Bank goes under. So they are more risky.

So Deutsche Bank (DBX) ETF's should be the same, if you buy shares in Apple or IBM or whatever by buying the ETF, you own those shares irrespective if SA or PSG or Deutsche Bank goes under. Added bonus of being a rand hedge.

I'm not in the financial world, this is just my understanding from what I've read, since I asked this question myself.

 

[TheGuy]

Ok thanks so this means it should be safe.

 

[proxilin]

I think their pretty safe in the case of SA's economy going bad, or against PSG going under. They are however rand-denominated and listed on the JSE, so as far as I can figure out that means they aren't completely offshore. They invest offshore, but aren't held offshore, which has benefits w.r.t. tax and foreign controls and things. But crazy idea, if suddenly the government decides they want 10% of your money, I think they can still get it. But in that case that'll be the least of your problems.

Again, this is just my layman understanding. Hoping for some other input, especially if I'm wrong.