Tax free saving account question

[kota]

Hi peeps, does anyone know what is the limitation on what tax free saving accounts can invest in, i.e. are they also subjected to limitations on investing in certain asset classes similar to pension funds and regulation 28?

From what I gathered, TFSA can invest in stocks, ETFs, money market etc but it doesn't specify the limit to foreign exposures, shares etc. If I look at Allan Gray and Sygnia's websites, there seems to be some kind of limitation on what TFSA can invest in as not all the UT / ETF are listed under their TFSA applications. An article on Fin24 made a statement that all Satrix UT/ETF are available as TFSA and I have also seen something similar when I was browsing around the Satrix website, so this is a bit confusing, maybe someone with more knowledge in this area can shred some light on what the limitations of what TFSA can invest in? Thanks!

 

[Hamster]

There's a limit on the amount that may be invested into one underlying share/commodity and I think it is 33%.

That's why you won't see single shares like NPN or ETFs like ETFRHO which tracks the price of rhodium.

Same reason why ETFs like STXIND recently added a cap to limit the amount of the fund that can be allocated to Naspers because it was getting so "big" that STXIND was about to start breaking the TFSA rules.

If you want to know more it's best to look on the Treasury's website since they govern it.

 

[RandomGeek]

There is also a limitation on the fee structure for the funds that you are allowed to invest in. Funds that charge a fixed fee (e.g. 0.5%, 0.9%, 1.234% etc) are acceptable. Funds that charge a varying fee (e.g. base of 1% + a variable fee for outperforming a benchmark) is not allowed under the TFSA rules.

There is no general limitation on specific assess classes compared to e.g. RAs that require Regulation 28 compliance. Therefore with a TFSA account you can end up with 100% international exposure without issues

 

[supersunbird]

There's a limit on the amount that may be invested into one underlying share/commodity and I think it is 33%.

That's why you won't see single shares like NPN or ETFs like ETFRHO which tracks the price of rhodium.

Same reason why ETFs like STXIND recently added a cap to limit the amount of the fund that can be allocated to Naspers because it was getting so "big" that STXIND was about to start breaking the TFSA rules.

If you want to know more it's best to look on the Treasury's website since they government it.

There is also a limitation on the fee structure for the funds that you are allowed to invest in. Funds that charge a fixed fee (e.g. 0.5%, 0.9%, 1.234% etc) are acceptable. Funds that charge a varying fee (e.g. base of 1% + a variable fee for outperforming a benchmark) is not allowed under the TFSA rules.

There is no general limitation on specific assess classes compared to e.g. RAs that require Regulation 28 compliance. Therefore with a TFSA account you can end up with 100% international exposure without issues

The above is correct

 

[kota]

Thanks for the clarifications peeps!!