Low-cost investing

2014-08-26 08:00

Since Sanlam bought out Satrix two years ago, it has been implementing some interesting changes that have improved the offering to investors who want to access low-cost passive index funds.

Satrix built its brand by offering exchange-traded funds (ETFs), which allow retail clients to track the stock market performance at a relatively low cost.

Investors purchase the ETFs through a stockbroker, or they could invest via the Satrix Investment Plan for monthly investments or a minimum lump sum of R1?000.

The underlying fund management costs are relatively low (about 0.5%, depending on the fund), but there is an additional 0.7% administration fee for using the Investment Plan, which brings the total cost of investing to more than 1% a year.

By using the existing Sanlam unit trust platform, Satrix now offers index-tracking unit trusts. This has reduced the administration costs of investing on a monthly basis.

Investors can access many of the indices offered by Satrix ETFs through the unit trust platform – for example, the Satrix Top 40 Index Fund, the Satrix Dividend Plus Index Fund, the Satrix RAFI 40 Index Fund and the MSCI World Equity Feeder Index Fund.

The total cost for both the underlying fund fee and administration is 0.6% a year, making it one of the most cost-effective investment options for someone wanting to invest R500 a month or a lump sum of R10?000.

In addition to the simple index-tracking funds, Satrix has created blended-index portfolios on its unit trust platform. The Satrix Balanced Index Fund provides investors with diversified exposure to all major asset classes, including offshore exposure. Last week, Satrix launched the low-equity balanced-index fund for more conservative investors.

Both of these funds meet the pension fund regulations and can be used in retirement funds. Satrix aims to launch a low-cost retirement annuity later this year and there are also plans to launch new international feeder funds.

Satrix ETFs remain a good option for investors who wish to invest in a diversified portfolio through their stockbroker, as well as for investors who wish to invest lower amounts – the minimum monthly investment for a Satrix ETF is R300 a month, with a minimum lump sum of R1?000.

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