Unit trusts? Etf's?

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Ztr1der

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Hello Finance friends

I am currently a 23 year old economics student in my last year and have a little bit of money to invest(I am looking for it to sit for many years and just accumulate). I however need advice on how to proceed, I have identified 4 Unit trusts that I am keen on, investing R500 p/m for each.

1. Coronation Balanced Plus Fund
2. Foord Flexible fund of funds
3. Investec opportunity funds
4. Allan gray equity fund

I am thinking I should be going for quite an aggressive strategy due to my age. I am unsure of the fees involved, for example Allan Grays equity fund's TER is roughly 2.5%. Is this too high? or is it right for the amount of risk involved? Last thing, for a young person like me should I be looking more towards ETF's or am I on the right path with the Unit trusts.

Thank you very much any and all help with be appreciated.
 
I use 3 out of those 4, Foord Flexible is my pick of the bunch.
But investing in all 4 is nice start, and you can adjust as you go along.
Be aware, Foord has a minimum of R1000pm in each fund.

Also, have you considered a TFSA?
 
Allan Gray Equity's fee is high yes, but it's performed well compared to its peers during these volatile markets.

I like your selection, but maybe you can remove one and invest in a Pure Offshore fund?
 
You get index unit trusts which is the same as ETFs (Satrix does both), index unit trust have a much lower TER generally (than managed unit trusts). Another provider of index unit trusts is Sygnia.
 
Last edited:
I should write a rebuttal titled:

Only idiots don't differentiate between managed unit trusts and index unit trusts...

(since its a 2015 article he has no excuse, 2012 he might have been excused)
 
supersunbird said:
I should write a rebuttal titled:

Only idiots don't differentiate between managed unit trusts and index unit trusts...

(since its a 2015 article he has no excuse, 2012 he might have been excused)
Click to expand...
Well call him: @Patrick
 
supersunbird said:
You get index unit trusts which is the same as ETFs (Satrix does both), index unit trust have a much lower TER generally. Another provider of index unit trusts is Sygnia.
Click to expand...

Not always the case, use Satrix 40 as an example:
Satrix 40 ETF - 0.44%
Satrix 40 index UT - 0.83%

Did a quick scan and it seems to only be the Divi index UT that is cheaper. (0.16% which seems crazily low)
Yes if you use the Satrix Investment Plan as your platform it works out more expensive, but that's not the only way to buy the cheaper option.
If you use a broker it should work out a lot cheaper if you planning to hold for the long run.
 
Hendrix said:
Not always the case, use Satrix 40 as an example:
Satrix 40 ETF - 0.44%
Satrix 40 index UT - 0.83%

Did a quick scan and it seems to only be the Divi index UT that is cheaper. (0.16% which seems crazily low)
Yes if you use the Satrix Investment Plan as your platform it works out more expensive, but that's not the only way to buy the cheaper option.
If you use a broker it should work out a lot cheaper if you planning to hold for the long run.
Click to expand...

I went and clarified what I meant:

supersunbird said:
You get index unit trusts which is the same as ETFs (Satrix does both), index unit trust have a much lower TER generally (than managed unit trusts). Another provider of index unit trusts is Sygnia.
Click to expand...

And Sygnias index fund TERs mostly hover around 0.44% too.

Not saying index unit trusts are better or worse than ETFs, just that they are another option and one can have both if one wants.
 
Hendrix said:
I use 3 out of those 4, Foord Flexible is my pick of the bunch.
But investing in all 4 is nice start, and you can adjust as you go along.
Be aware, Foord has a minimum of R1000pm in each fund.

Also, have you considered a TFSA?
Click to expand...

I currently do have a TFSA account with Easy Equities. I have been looking at property, dbxwd and satrix indi index's but I am still very new on how to use my money wisely. So you think unit trusts are the way to go for my situation? Do you have any recommendations for offshore funds I should be aware of? I would definitely like to have something to hedge against the rand in case it all goes pear shaped.
 
Decide what percentage you want offshore. Foord Flexible is already 65% offshore.
DBXWD is good, I also use PSG Global Flexible.
Do not buy something you not comfortable with or do not understand, you can always change things later on when you've learnt more.
The fact that you want to start building wealth so early shows you should be comfortable in no time.
 
Well I just bought a boatload of EFTs...per Murphy's law the market will crash tomorrow...so I'd suggest maybe wait 24hrs ok?

Ztr1der said:
I am thinking I should be going for quite an aggressive strategy due to my age. I am unsure of the fees involved, for example Allan Grays equity fund's TER is roughly 2.5%. Is this too high?
Click to expand...
Yeah that is indeed high. I'd be looking for something below 1% in SA. (Overseas you can easily get <0.25%). Unless you buy the argument that active management is worthwhile I'd aim to minimise cost...especially R500. If you're not careful the fees will eat your lunch.
 
supersunbird said:
I should write a rebuttal titled:

Only idiots don't differentiate between managed unit trusts and index unit trusts...

(since its a 2015 article he has no excuse, 2012 he might have been excused)
Click to expand...

You missed the last line of my article:
*Note that not all unit trusts are actively managed with high fees. Some in fact are passive index trackers, and have fees similar to ETFs. In America Vanguard operates like this, with their fund fees being the same as their ETF fees. In South Africa, as far as I know it’s only Sygnia that has funds like this.
Click to expand...

But I would imagine the average unit trust fees to be around 1.5%-2%, while the average ETF fees are more than likely to be under 0.5%. I do love Sygnia though, and wouldn't recommend anyone else for an RA.

Let me know if you do ever feel like doing an article on my site. Your posts here are excellent, so I'd be happy to put up some of your writing.
 
Thank you to everyone who posted and contributed. I have decided to mix it up, go with ETF's in my TSFA account and get involved with 2 or 3 unit trusts.
 
Anyone got information or your opinions of the Sygnia Skeleton International Equity Fund of Funds for a TFSA account? Fees are low, at 0.65%, however, no TER due to the fund only being launched late last year?

It will be my 1st time considering a boutique firm. Other funds with Allan Gary and Coronation.I'm looking to increase offshore exposure, however the "Allan Gray Orbis Global Equity feeder fund" is closed to new investments, and has been for quite a while now.
 
Ztr1der said:
Hello Finance friends

I am currently a 23 year old economics student in my last year and have a little bit of money to invest(I am looking for it to sit for many years and just accumulate). I however need advice on how to proceed, I have identified 4 Unit trusts that I am keen on, investing R500 p/m for each.

1. Coronation Balanced Plus Fund
2. Foord Flexible fund of funds
3. Investec opportunity funds
4. Allan gray equity fund

I am thinking I should be going for quite an aggressive strategy due to my age. I am unsure of the fees involved, for example Allan Grays equity fund's TER is roughly 2.5%. Is this too high? or is it right for the amount of risk involved? Last thing, for a young person like me should I be looking more towards ETF's or am I on the right path with the Unit trusts.

Thank you very much any and all help with be appreciated.
Click to expand...

First of all, well done on thinking about these things at age 23!

And yes, you should absolutely go for maximum returns and can afford high risk as you are in the wealth accumulation phase of your life right now. But instead of all those "fancy" mutual funds, how about we actually reconsider. Some of those have had a great few years but the stats don't lie - index funds beat 80%+ of any managed funds over the long term.

So I would consider it ill-advised if you don't invest in an index fund of sorts. The costs are much lower and the performance is what it is. You can find a list of all ETF's and Unit Trust index funds here, it's pretty damn simple. I am investing primarily with Satrix but any provider will do, do your own research. Good luck!
 
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