Unit Trusts worth it?

DrJohnZoidberg

DrJohnZoidberg

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I've been putting R1000 a month into a Sanlam unit trust for about a year and half now.

It's moderate/low risk but I was expecting to at least see some growth over this time but I've got a few hundred bucks less than what I've put into it and doesn't really vary too much.

Is it possibly because it's still a small amount or just the state of the market currently?


I'm looking to put some more money away now and not sure where to put it, I've got a 7/32 day notice account open at FNB now which seems to make more sense to me as I'm actually seeing interest here. Thinking of just using this FNB account now and leave the unit trusts as is.

P.S. I'm not looking for high risk investments with this money.
 
Sounds like you picked a UT that performed badly. It happens.

I prefer ETFs but to each his/her own.

I wouldn't do notice account - those rates are usually below/near official inflation. Meaning you're guaranteed to be losing money in real terms, which in my books is worse than the *possibility* of losing money with UT/ETF
 
HavocXphere said:
Sounds like you picked a UT that performed badly. It happens.

I prefer ETFs but to each his/her own.

I wouldn't do notice account - those rates are usually below/near official inflation. Meaning you're guaranteed to be losing money in real terms, which in my books is worse than the *possibility* of losing money with UT/ETF
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One thing I didn't mention is that this is for short term investment, like 3 - 5 years.


I had to Google what an ETF was, I'm positively clueless when it comes to finance. What make ETFs good? I'm currently just relying on my broker to give me advice.
 
DrJohnZoidberg said:
I've been putting R1000 a month into a Sanlam unit trust for about a year and half now.

It's moderate/low risk but I was expecting to at least see some growth over this time but I've got a few hundred bucks less than what I've put into it and doesn't really vary too much.

Is it possibly because it's still a small amount or just the state of the market currently?


I'm looking to put some more money away now and not sure where to put it, I've got a 7/32 day notice account open at FNB now which seems to make more sense to me as I'm actually seeing interest here. Thinking of just using this FNB account now and leave the unit trusts as is.

P.S. I'm not looking for high risk investments with this money.
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Well, what unit trust is it?

Something low risk (mostly into just cash and bonds) will probably have done better than most moderate and high risk unit trusts, which will likely have been flat over the year.

Using the comprehensive (but by no means exhaustive) list of unit trust from this website (https://wealth.psg-online.co.za/FundsAZ/) which lists about 450 unit trusts, about 150 of them had negative growth, about 150 had grown between 0% and 6,5%, so not beating or just matching official inflation rate and about 150 beat the official inflation rate.

And the top 12 funds over 2016 (with performance from 62% to 32%)?

Coronation Resources Fund (P)
Investec Value Fund (R)
Investec Value Fund (H)
Investec Value Fund (A)
Investec Value Fund (B)
Old Mutual Mining & Resources Fund (R)
Old Mutual Mining & Resources Fund (A)
Investec Commodity Fund (R)
Investec Commodity Fund (H)
Investec Commodity Fund (A)
Investec Commodity Fund (B)
Momentum Resources Fund (A)

Stuff almost no one would have bought at the start of 2016 (resources funds or deep value funds heavy in resource stocks).
 
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supersunbird said:
Well, what unit trust is it?

Something low risk (mostly into just cash and bonds) will probably have done better than most moderate and high risk unit trusts, which will likely have been flat over the year.

Using the comprehensive (but by no means exhaustive) list of unit trust from this website which lists about 450 unit trusts, about 150 of them had negative growth, about 150 had grown between 0% and 6,5%, so not beating or just matching official inflation rate and about 150 beat the official inflation rate.

And the top 12 funds over 2016 (with performance from 62% to 32%)?

Coronation Resources Fund (P)
Investec Value Fund (R)
Investec Value Fund (H)
Investec Value Fund (A)
Investec Value Fund (B)
Old Mutual Mining & Resources Fund (R)
Old Mutual Mining & Resources Fund (A)
Investec Commodity Fund (R)
Investec Commodity Fund (H)
Investec Commodity Fund (A)
Investec Commodity Fund (B)
Momentum Resources Fund (A)

Stuff almost no one would have bought at the start of 2016 (resources funds or deep value funds heavy in resource stocks).
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I've got a 60/40 split between these two funds:

https://www.sanlam.com/productcatal...FundFactSheets/SI_SIM General Equity Fund.pdf <- 60% in here
https://www.sanlam.com/productcatal...actSheets/CZ_SL_etopaz_sim_inflation_plus.pdf <- 40% here

Neither are seeing growth for me at the moment.
 
DrJohnZoidberg said:
I'm currently just relying on my broker to give me advice.
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unless you start acquiring knowledge about financial markets very quickly and understanding where your money is going and how the value is affected, I do not see this being a positive experience for you
 
DrJohnZoidberg said:
One thing I didn't mention is that this is for short term investment, like 3 - 5 years.


I had to Google what an ETF was, I'm positively clueless when it comes to finance. What make ETFs good? I'm currently just relying on my broker to give me advice.
Click to expand...
Satrix etc are ETFs so you've probably heard of it just didn't know it.

>>What make ETFs good?

Low cost & diversification. Satrix has TER (i.e. cost) of <0.4% ...compared with the one you've got there of 1.7%. Combine that with the fact that its very much in doubt whether they can beat the market & you're likely better off with passively managed investments (in my opinion).

https://en.wikipedia.org/wiki/List_of_South_African_exchange-traded_funds

ETFs like UTs can go up or down though - no guarantees in this game unless you're willing to accept the fixed interest thing I mentioned earlier.
 
saturnz said:
unless you start acquiring knowledge about financial markets very quickly and understanding where your money is going and how the value is affected, I do not see this being a positive experience for you
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Ain't nobody got time for that. That's why I have a broker/adviser.

I'm just trying to get a feeler here for what's normal as it's always good having input from multiple sources. I can then take this info to my broker and ask him for further advice.
 
DrJohnZoidberg said:
Ain't nobody got time for that. That's why I have a broker/adviser.

I'm just trying to get a feeler here for what's normal as it's always good having input from multiple sources. I can then take this info to my broker and ask him for further advice.
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so you are unfamiliar with principle/agent problems?

why is your broker still working, he should be rich by now
 
DrJohnZoidberg said:
I've got a 60/40 split between these two funds:

https://www.sanlam.com/productcatal...FundFactSheets/SI_SIM General Equity Fund.pdf <- 60% in here
https://www.sanlam.com/productcatal...actSheets/CZ_SL_etopaz_sim_inflation_plus.pdf <- 40% here

Neither are seeing growth for me at the moment.
Click to expand...

Well, the SIM General Equity Fund is on 0% growth basically, their November fact sheet shows -2 over 1 year in fact. It's not moderate, it's kind of higher risk than that, cause it's just local shares.

The SIM Inflation Plus Fund says it cautious but to me a target of inflation plus 4 sounds moderate. It had about 4.5% growth. Why the hell does the Inflation Plus Fund fact sheet have so little info compared to the other one I wonder?

And then there are the fees (the fund ones and whatever you pay that advisor), add those and the fact that the fund with 60% weight grew 0% and I can see why you are a bit down compared to what you put in.

Not that you are alone. I put a lump sum into a R Denominated low risk foreign fund in April and that's down 8% in R terms due to R strength.
 
If I had been your advisor at the start of 2016 and had to get you something, given your 3 to 5 year timeframe and just had the SIM funds to choose from, I'd have chosen the SIM Active Income Fund (conservative fund, which gave about 9% return over that period), like 50% to 75% into that, and the other portion into the SIM General Equity fund.

https://www.sanlam.com/productcatal...mFundFactSheets/SI_SIM Active Income Fund.pdf

Not that I am an advisor or even want to be. Just what I would have done given those parameters.
 
supersunbird said:
Well, the SIM General Equity Fund is on 0% growth basically, their November fact sheet shows -2 over 1 year in fact. It's not moderate, it's kind of higher risk than that, cause it's just local shares.

The SIM Inflation Plus Fund says it cautious but to me a target of inflation plus 4 sounds moderate. It had about 4.5% growth. Why the hell does the Inflation Plus Fund fact sheet have so little info compared to the other one I wonder?

And then there are the fees (the fund ones and whatever you pay that advisor), add those and the fact that the fund with 60% weight grew 0% and I can see why you are a bit down compared to what you put in.

Not that you are alone. I put a lump sum into a R Denominated low risk foreign fund in April and that's down 8% in R terms due to R strength.
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supersunbird said:
If I had been your advisor at the start of 2016 and had to get you something, given your 3 to 5 year timeframe and just had the SIM funds to choose from, I'd have chosen the SIM Active Income Fund (conservative fund, which gave about 9% return over that period), like 50% to 75% into that, and the other portion into the SIM General Equity fund.

https://www.sanlam.com/productcatal...mFundFactSheets/SI_SIM Active Income Fund.pdf

Not that I am an advisor or even want to be. Just what I would have done given those parameters.
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Sweet man, thanks for the insights. I'll chat with him about this when we meet again and mention this.
 
DrJohnZoidberg said:
Sweet man, thanks for the insights. I'll chat with him about this when we meet again and mention this.
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Pleasure.

Oh, another thing, you also get index tracking Unit Trusts, that are similar to ETFs (there are various small differences between ETFs and Unit Trusts, not a big deal at all in my opinion). Low cost and just follows a chosen index, like an ETF.

Just some other info:
Sanlam owns Satrix, I had a SIM index unit trust that was moved over to a Satrix index unit trust when SIM index unit trusts were merged with the Satrix ones. So Satrix offers unit trusts and ETFs. There are other ETF providers too and other index Unit Trust providers too.

But few of these would suit your timeframe, which should probably be 2 to 4 years now?
 
DrZoidBerg one thing to keep in mind is that you only realise the losses when selling.

The financial markets have been terrible in general this past year and you maybe just were unlucky to choose the wrong ones.

Whatever you do don't now bail because it's down, because it's only when you sell that you are actually losing.

So stick to your 5 year plan and re-evaluate at the end of the period.

As for the new money put that in somewhere else and make sure it diversifies from the UT's you have already.
 
SauRoNZA said:
The financial markets have been terrible in general this past year and you maybe just were unlucky to choose the wrong ones.
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the major financial markets have been up for the calender year last year, the DOW and FTSE reaching record highs

which markets have been terrible?
 
saturnz said:
the major financial markets have been up for the calender year last year, the DOW and FTSE reaching record highs

which markets have been terrible?
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Our own...which is what's most applicable here.

Wtf.

Why would we even consider the other markets when he is invested in SA specifically?
 
theres a huge difference between "financial markets" and local markets

and even then, our local financial market did not perform terribly
 
SauRoNZA said:
DrZoidBerg one thing to keep in mind is that you only realise the losses when selling.

The financial markets have been terrible in general this past year and you maybe just were unlucky to choose the wrong ones.

Whatever you do don't now bail because it's down, because it's only when you sell that you are actually losing.

So stick to your 5 year plan and re-evaluate at the end of the period.

As for the new money put that in somewhere else and make sure it diversifies from the UT's you have already.
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That true, makes me think of something to consider.

DrJohnZoidberg, are you definitely going to use the money within 5/4 years? (house deposit, education fees?)

If yes, and I think it will be yes, why else the timeframe, then that's why I say a conservative base with a growth component. The loses are minimal in my opinion at the moment so a switch will not that bad. It's true that market might grow a lot, as I said, no one bought resource shares/funds at the start of 2016, most pushed money overseas, and then those resource shares/funds did great, one just doesn't know and if you are conservative that's just not good.
 
supersunbird said:
DrJohnZoidberg, are you definitely going to use the money within 5/4 years? (house deposit, education fees?)
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Yup. It's for a home loan deposit when the time comes.

I was just contemplating whether I should put more in there (like a lump sum now) or just leave it as is with the monthly debit order and put the extra funds elsewhere. Not going to completely kill it.
 
saturnz said:
theres a huge difference between "financial markets" and local markets

and even then, our local financial market did not perform terribly
Click to expand...

No, but the ALSI grew at like 1%. So most invested people lost some purchasing power of their money, because inflation. So in no way did it perform great unless you were lucky.

And if you invested overseas in Jan, your performance will most likely flat or negative in R terms if you needed to cash it in now.
 
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