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GoldenBalls

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Exchange Traded Funds
« on: July 17, 2013, 04:33:23 pm »
Hi All

A good Exchange Traded Fund is the best investment over a 20 to 30 year period because of it's low fees and the fact they out perform more than 90% of all managed funds?
For an individual it is better to take an exchange traded fund with low fees than buying shares directly through ABSA stockbrokers yourself because of fees and the fact that as small investor you can't diversify from the beginning your money in different company's like an exchange traded fund can?

I invest in a Satrix Indi Fund? I also invest in an Allan Gray Equity Fund? However I am not happy with the sliding fees structure of Allan Gray.

Any education you can give me on the Johannesburg Stock Exchange would be much appreciated.

Regards James


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Orca

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Re: Exchange Traded Funds
« Reply #1 on: July 17, 2013, 06:00:30 pm »
Not actually correct. It is only the STXIND that beats 99% of fund managers. Not the other ETF's. Fund Managers are restricted by the FSB as to the percentage they can allocate to equities. This has recently been increased thankfully.
Management fees for UT's and Managed Accounts over a 10 year period is phenomenal if you can work out what you would have had, had you not paid the fees.
Buying STXIND from the website is more expensive than buying directly on the JSE via a broker. You need a broker if you want to buy shares on the JSE albeit ABSA, SB or ImaraSPReid.
If you hold R1M Indi shares via Imara, you will pay R250.00 per year admin fees.
   
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Patrick

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Re: Exchange Traded Funds
« Reply #2 on: July 17, 2013, 07:18:17 pm »
I thought funds which don't want to qualify as retirement funds are allowed to go 100% equity. I know FOORD equity who I'm with is practically all equity.

Welcome GoldenBalls. I'm in the same boat as you, I put a chunk of money into a unit trust, and now I plan on moving it to an ETF also due to the fees. At the moment it'll also be the indi like you, but as I get closer to early retirement I may switch to the divi.

I'm with ABSA stockbrokers, and as they charge 0.4% or R120 minimum, plus waive the R800 yearly fee is you trade 5 times a year, they only make the best financial sense if you can invest R150k a year.
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Orca

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Re: Exchange Traded Funds
« Reply #3 on: July 17, 2013, 07:58:10 pm »
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gcr

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Re: Exchange Traded Funds
« Reply #4 on: July 17, 2013, 11:48:28 pm »
Quote from: Patrick on July 17, 2013, 07:18:17 pm
I thought funds which don't want to qualify as retirement funds are allowed to go 100% equity. I know FOORD equity who I'm with is practically all equity.

Welcome GoldenBalls. I'm in the same boat as you, I put a chunk of money into a unit trust, and now I plan on moving it to an ETF also due to the fees. At the moment it'll also be the indi like you, but as I get closer to early retirement I may switch to the divi.

I'm with ABSA stockbrokers, and as they charge 0.4% or R120 minimum, plus waive the R800 yearly fee is you trade 5 times a year, they only make the best financial sense if you can invest R150k a year.
Patrick - if you get closer to retirement you would consider switching to STXDIV - why would you want to do that - the growth in share price is pretty dismal. I think its a fallacy to believe that once you get close to retirement or actually retire that you must suddenly become all coy and cautious - I think this is nonsense - maybe what you need to consider is that you take say 60% of your invested funds and put that in to less risky but stable companies and use the 40% to invest in more riskier shares, but, this does not mean investing in penny stocks - prior to or during retirement these are a no, no.
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Patrick

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Re: Exchange Traded Funds
« Reply #5 on: July 18, 2013, 03:43:42 pm »
This is the way I see it. And note, I'm still an amateur investor, so I have a dozen or so years to figure out my strategy.

If I go for growth stocks, and have to sell shares to survive I'm in danger of two things. 1) the taxman will nail me, and 2) If there's a crash I would end up selling my capital at a low value.

I plan to live on dividends. 1) The taxman won't tax them any more than the withholding tax, and 2) If there's a crash dividend amounts shouldn't drop (or do they?), and I won't need to sell any capital.

If I get growth great, but I won't need to rely on it. Horses for courses no?

Happy to take advice from people who know more than me, ie all but our friend Julius  :D
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Orca

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Re: Exchange Traded Funds
« Reply #6 on: July 18, 2013, 05:45:42 pm »
Good growth, good divies. If the price tanks then so does the divi. In a good year you might get 6 or 7%. Could you live on that? I would rather go for a Fixed Deposit at a bank and still get 6% pa AND my cash will not be affected by markets.
STXDIV sucks. Go for better returns like the Indi and withdraw what you need and pay taxes. You will be better off. That is what I'm going to do.
6% divi with STXDIV cannot compare to 35% Indi less tax if you know what I'm saying.
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