RA (Unit Trusts) - questions

[xrapidx]

1.) With regards to returns, how should an RA compare to Equities (JSE/All Share Index) - or what should you aim for?

I have one which is a good % more than cash and inflation over the period, and about 3% less than Equities.

2.) If you have your unit trust based RA at a specific company, say Allan Gray, what happens if they ever go bottoms up? Is there some sort of security?

3.) Anyone have any suggestions what I can add to my RA

 

[OrbitalDawn]

1) Couple of % points less than equities, I reckon. Full on equity investments are a bit more risky, so have a bit higher return. RA's have to be Regulation 28 compliant, which regulates their exposure levels. So they're a safer bet, but slightly less returns.

2) No idea - very good question.

3) You can have as many as you want? Go wild.

Personally I have an RA and separate Unit Trust (Equity Fund) investment with Allan Gray.

 

[Rkootknir]

1) Couple of % points less than equities, I reckon. Full on equity investments are a bit more risky, so have a bit higher return. RA's have to be Regulation 28 compliant, which regulates their exposure levels. So they're a safer bet, but slightly less returns.

2) No idea - very good question.

3) You can have as many as you want? Go wild.

Personally I have an RA and separate Unit Trust (Equity Fund) investment with Allan Gray.

Point 2: RAs are essentially personal retirement funds. As such they're governed under the Pension Funds Act as separate legal entities i.e. they are bankruptcy remote. The creditors of your RA management company can't touch anything in the retirement fund should the management company enter bankruptcy.

 

[xrapidx]

What would happen though? Where would it end up.

 

[supersunbird]

Well, if you want you can put 50% local equity and 25% foreign equity (or 75% local) and 17.5% property fund and 7.5% bond or money market fund, but that's admin as you would need to rebalance it every few months.

Works only if doing R2000 or more PM.

 

[supersunbird]

What would happen though? Where would it end up.

Probably have to be moved over to a new provider.

 

[Rkootknir]

What would happen though? Where would it end up.

The trustees of the RA fund can just appoint a new management company. The trustees of the RA fund do not have to be employees of the management company.