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New index-tracking unit trusts on the market

Personal Finance

Another nine index-tracking unit trusts, including smart beta funds, were launched this month.

CoreShares, which is owned by Grindrod Financial Services, has launched four of its exchange traded funds (ETFs) as unit trust funds. It has done this to make it more likely that financial advisers will recommend the funds to their clients, and so that investors can access the funds via an investment platform or a linked-investment services provider (lisp).

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Financial advisers typically do not recommend ETFs, because they cannot easily recover advice fees. ETFs are listed shares, and many lisps do not include ETFs in their range of underlying investments.

The four funds that CoreShares has launched are:

• The CoreShares S&P SA Dividend Aristocrat Tracker Fund;

• The CoreShares S&P SA Low Volatility Tracker Fund;

• The CoreShares S&P SA Top 50 Tracker Fund; and

• The CoreShares Property Top Ten Tracker Fund.

Three of the four funds are smart beta ones, which means they don’t track an index made up of shares in line with their issued value in a market, but an index that takes other investment principles or factors into account. The funds have fees of between 0.2 and 0.425 percent (excluding VAT).

First National Bank (FNB) has launched five unit trust funds of funds in its Horizon series that combine Ashburton’s index-tracking funds with its actively managed single-manager and multi-managed funds.

Each fund of funds is suitable for a different investment time horizon (term) and the fund decides on your behalf whether to invest actively or passively and when to use a single manager or multiple managers.

• The FNB Income Fund is for investors with a one- or two-year time horizon and targets a return of inflation, as measured by the Consumer Price Index (CPI) plus one percentage point. It is exposed mainly to cash and bonds, and will invest no more than four percent in equities. Its current allocation is to international equities.

• The FNB Stable Fund is for investors with a three-year time horizon and targets a return of CPI plus two percentage points. It invests up to 15 percent in local and offshore equities and South African listed property. Currently, the fund has 12 percent in offshore equities, three percent in listed property and the rest in cash and bonds.

• The FNB Moderate Fund is for investors with a five-year time horizon and targets a return of CPI plus 3.5 percentage points. It invests up to 34 percent in local and offshore equities and South African listed property, and the rest in fixed interest.

• The FNB Growth Fund is for investors with a seven-year time horizon and targets CPI plus five percentage points.

It always invests at least 75 percent of the fund in local and offshore equities and listed property, and complies with regulation 28 of the Pension Funds Act, making it suitable for retirement fund members.

• The FNB Growth Plus Fund is for investors with a time horizon of 10 years and has a benchmark of the FTSE/JSE All Share Index. It has a flexible mandate to invest across asset classes and to vary its local and offshore exposure in line with its views. It currently has 35 percent in offshore equities, 18 percent in local equities and 35 percent in listed property.

The fees on the above funds range from one percent to 1.68 percent (excluding VAT).

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