Unit trusts

Drifter

Drifter

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Which is the best Unit trust to invest in , or financial company that can assist me in investing in unit trusts. I want to start with a R1000 p/m and gradually increase the amount. It must also be set up in such a way that I can randomly pay in additional amounts if I wish to.

Or, is there an alternative investment vehicle that would yield better returns?


Any ideas?
 
Well, whats your aim with the investment? Long term savings? Just general savings? Whats your risk appetite?

Personally I like a mix of shares, property and overseas. With a R1000 I'd be torn between R500 into a large cap equity fund and then either R500 into a property fund or a foreign fund. With R1500pm it woulf be easier (R500 into each) and with R2000 pm it would be ideal (R1000 would be into equity and then R500 each into property and then the other R500 into a foreign fund). My money would go into Coronation funds because they have the spread of funds I want, but there are many funds and providers out there to choose from.
 
Gerhardva said:
Which is the best Unit trust to invest in , or financial company that can assist me in investing in unit trusts. I want to start with a R1000 p/m and gradually increase the amount. It must also be set up in such a way that I can randomly pay in additional amounts if I wish to.

Or, is there an alternative investment vehicle that would yield better returns?


Any ideas?
Click to expand...

Call up Allan Gray, and ask to speak to a financial advisor.
Ask this exact question.
They will help you out
 
Long term savings. I guess I will split as you mention, so higher risk with higher potential return. Dont believe in all the eggs in one basket kind of thing.
 
Hi Gerhardva,

I am a financial advisor and would like to add to what the others have said above. Adding to what supersunbird said, there are many different kinds of unit trusts. But they can be broken down into 2 main types:

First: multi asset unit trusts

These funds choose the asset allocation for you. Coronation for example has the Coronation Balanced Plus fund which has for instance a 65% allocation to equity, with some property, bonds and cash. The Coronation Balanced Defensive fund has a lower allocation to equity and property with more bonds and cash and thus would be considered a more conservative fund to invest in. These fund managers are nice because they do the work for you in terms of balancing the portfolio, all you have to know is if you are conservative, moderate or aggressive in terms of your investment profile. But are normally a few beps more expensive.

2. Asset allocation unit trusts.

these unit trusts focus on a specific type of asset. For example the coronation top 20 is pure equity, or the coronation jibar plus is more about bonds and fixed deposits, no equity.

There is much more to this, but if you are new to unit trusts you can watch a youtube video I made on the subject. It should help you understand how they work.

If you have any questions feel free to ask.
 
ahhh finally. been thinking of this as well. although i need to gooi in more. for some insane reason the laaitie doesnt have an education policy. i still to this day have no idea why.

laaitie is in grade 11. so i was thinking of getting a unit trust that i can continue with even when his tertiary is done. like a slush fund for big purchases or whatever.
 
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@Gerhardva

Quick question, do you have any debt? i.e car or home loan?
 
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Look into ETFs rather than unit trusts. You pay a lot less in fees, and potentially get exposure to a wide range of assets depending on which ETFs you opt for.

Something like FNB Sharesaver sets up a monthly debit for you that buys into two RMB ETFs (midcap and top40), minimum R300 pm with pretty low brokerage and fees if you opt for the automatic debit option rather than ad-hoc buying.
 
Sinbad said:
Look into ETFs rather than unit trusts. You pay a lot less in fees, and potentially get exposure to a wide range of assets depending on which ETFs you opt for.

Something like FNB Sharesaver sets up a monthly debit for you that buys into two RMB ETFs (midcap and top40), minimum R300 pm with pretty low brokerage and fees if you opt for the automatic debit option rather than ad-hoc buying.
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so unit trusts have lots of fees? thought it was a cost effective way of saving. satrix has been mentioned a fair bit on here as well. i just need a place where my money can grow. reasonable fees with decent accessibility (1 month is fine).

been thinking about retail savings bonds as well.
 
akescpt said:
so unit trusts have lots of fees? thought it was a cost effective way of saving. satrix has been mentioned a fair bit on here as well. i just need a place where my money can grow. reasonable fees with decent accessibility (1 month is fine).

been thinking about retail savings bonds as well.
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http://www.allangray.co.za/assets/brochures/Fee information.pdf
TER is the percentage they charge of the value each year.
http://www.etfsa.co.za/Factsheets/rmbtopforty_sept2012.pdf
 
@Akescpt and Gerhardva

Anyway, the reason I asked is I generally believe in not investing in unit trusts/savings etc and instead paying off home/car loans, as your savings on interest are absolutely massive. Currently I am putting R500 extra into my bond account every month, and in the end, I will pay up my house 4years sooner than originally planned. In addition, that money is always available to me (access bond) if needed on a rainy day.

Just my opinion, although I am not a financial planner. Oh and I know it's not answering the OP's original question, just trying to make you think about it.
 
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Sinbad said:
Look into ETFs rather than unit trusts. You pay a lot less in fees, and potentially get exposure to a wide range of assets depending on which ETFs you opt for.

Something like FNB Sharesaver sets up a monthly debit for you that buys into two RMB ETFs (midcap and top40), minimum R300 pm with pretty low brokerage and fees if you opt for the automatic debit option rather than ad-hoc buying.
Click to expand...

Mmmm, 0.4% FNB charge + 0.21% TER from the ETF. So 0.61% ongoing fee + VAT. Not bad. Just a 0.6% initial brokerage fee, which is fine. This is cost effective.

so unit trusts have lots of fees?
Click to expand...

Yes and no, its expensive compared to the above ETF but they Index ETF's try there best to mimic the indexs like the top 40. A unit trust will try and out perform the benchmark. So for example the RMB TOP 40 index ETF goal is to match the performance of the top 40. The Coronation Top 20 goal is outperform the benchmark (which is the top 40). You have to compare the performance to make a decision. Since 2000 the top 40 annualized return has been 16.43%, the Coronations top 20 has done 22.8%, a 6.38% out-performance. So with a advisor fee + platform fee + asset management fee the cost would be around 2.7%. So your net out performance after costs is 3.68%, annualized. (keep in mind this is based on a past)

The point im trying to make is that those ETF's are relatively cheap, but a unit trust will try and beat that performance and hopefully not only make up for the extra costs but also give you extra return.
 
F1 Fan said:
@Akescpt and Gerhardva

Anyway, the reason I asked is I generally believe in not investing in unit trusts/savings etc and instead paying off home/car loans, as your savings on interest are absolutely massive. Currently I am putting R500 extra into my bond account every month, and in the end, I will pay up my house 4years sooner than originally planned. In addition, that money is always available to me (access bond) if needed on a rainy day.

Just my opinion, although I am not a financial planner.
Click to expand...

Hi F1 Fan,

Great idea, but i would just like to add to that line of thinking. If say for example your the interest you pay on that loan is Prime +1.5, so 10% which is the "cost" of loan. And you can get a potential return on a balanced unit trust of lets say 14%, would it not make more since to invest the R500 and let it grow @ 14% and pay the bond off at 10% and pocket the 4% difference in investment return.

I have actually done the calculations on this exact matter for a youtube video im working on to see if its better to focus on settling debt or investing it and the results are surprising. If everyone is ok with it and it doesnt go against the rules of the forum ill make a new post about it when its up.

been thinking about retail savings bonds as well.
Click to expand...

Please dont do this, although your investment is almost risk free, you wont be able to outperform inflation, so you will have no real growth. Unless risk free is your objective.
 
Jozsef Borbely said:
Mmmm, 0.4% FNB charge + 0.21% TER from the ETF. So 0.61% ongoing fee + VAT. Not bad. Just a 0.6% initial brokerage fee, which is fine. This is cost effective.
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R0 to R250 000
0.40% per annum plus VAT

R250 001 to R1 000 000
0.35% per annum plus VAT

>R1 000 001
0.30% per annum plus VAT

I think the TER is included in that actually. Also, if you use the debit order option the brokerage is 0.1% plus vat, including strate charge and investor protection levy. (Min R40 though)

Yes and no, its expensive compared to the above ETF but they Index ETF's try there best to mimic the indexs like the top 40. A unit trust will try and out perform the benchmark. So for example the RMB TOP 40 index ETF goal is to match the performance of the top 40. The Coronation Top 20 goal is outperform the benchmark (which is the top 40). You have to compare the performance to make a decision. Since 2000 the top 40 annualized return has been 16.43%, the Coronations top 20 has done 22.8%, a 6.38% out-performance. So with a advisor fee + platform fee + asset management fee the cost would be around 2.7%. So your net out performance after costs is 3.68%, annualized. (keep in mind this is based on a past)

The point im trying to make is that those ETF's are relatively cheap, but a unit trust will try and beat that performance and hopefully not only make up for the extra costs but also give you extra return.
Click to expand...

The Top40 index ETF doesn't have a goal of matching the performance of the top40 index. It is composed entirely of a basket of the top40 shares, so by definition it will match the performance of the index.

Some funds do outperform passively managed investments, but a lot of them don't, especially after you factor in the costs. I guess it comes down to your appetite :)

http://www.moneyweb.co.za/moneyweb-investment-insights/managed-equity-funds-vs-etfs
 
Jozsef Borbely said:
Hi F1 Fan,

Great idea, but i would just like to add to that line of thinking. If say for example your the interest you pay on that loan is Prime +1.5, so 10% which is the "cost" of loan. And you can get a potential return on a balanced unit trust of lets say 14%, would it not make more since to invest the R500 and let it grow @ 14% and pay the bond off at 10% and pocket the 4% difference in investment return.
Click to expand...

Ok, so I understand your thinking, but the cost of the loan is let's say R500 000, at 10%. Your R500 investment, will only grow at R500 per month, so even with the higher interest rate, your return would be significantly lower.

I could be wrong though and have not researched it thoroughly enough. So I would be very interested to see your post.
 
F1 Fan said:
Ok, so I understand your thinking, but the cost of the loan is let's say R500 000, at 10%. Your R500 investment, will only grow at R500 per month, so even with the higher interest rate, your return would be significantly lower.

I could be wrong though and have not researched it thoroughly enough. So I would be very interested to see your post.
Click to expand...

I can see why you would have trouble understanding the logic. But in the video i use graphs to help explain how the amortization works. So it should help.

One thing thou about settling debt rather then investing, is that that your "return" on settling debt, lets say the 10% is fixed/guaranteed, the return from a investment can fluctuate, 11% one year, then 16% then next.
 
Well, if you want to go diversified with ETFs you can do the following through the etfsa platform:

R400 (ETF):
Nedbank Capital BettaBeta EWT 40 or Satrix INDI

R300 (ETF):
Property Tracker SAPY or Proptrax Ten

R300 (ETN):
DB MSCI Emerging Markets Total Return

So OP, you have a lot of thinking to do and reading up and make a decision, is what I suggest...
 
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