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What is a collective investment in securities?
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A collective investment in securities offers you easy access to the stock exchange without needing knowledge or experience of investing in equities. Collective investments in securities are made up by pooling a lot of people's money, which is then invested by experts mainly in shares on the Johannesburg Securities Exchange and offshore funds.
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How does it work?
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An investment portfolio is divided into equal units. Each unit represents a direct proportionate interest in every asset in the portfolio. The value of the units is subject to the rise and decline in the market value of the assets. You purchase units in the relevant fund and the number you will receive will depend on the amount invested and the ruling unit price (the unit price is calculated daily at the ruling market values of the various investments in the portfolio).
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Why would I want to invest in a collective investment in securities?
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The reason for the popularity of collective investments in securities is security, good returns, tax benefits, protection against inflation and convenience.
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What are the disadvantages? |
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Collective investments in securities are the ideal investment choice for most people, but should any of the following be applicable to you, you should rather find another way of saving:
- If you want to invest for a period less than three years (except for Money Market Fund investments);
- If you want to use your investment like a savings account - in other words, if you were to make regular withdrawals (except for Money Market Fund investments);
- If you have not made enough provision for insurance, pension and short-term expenses;
- If you want to avoid risks at all costs;
- and If you were to invest borrowed money.
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How safe is an investment in an equity fund?
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Risk is attached to any investment in shares. An equity fund, however, limits this risk, as the spread of the portfolio's assets is prescribed by law. The law also stipulates that these assets be held in trust in order to protect you against the possibility of fraud.
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For how long should I invest?
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Since you are not tied to a specific term by any contract, you may invest for as long as you wish. It is ideal to invest in equity funds for any period longer than five years, although it is also possible to make considerable profit in the short term. If you're looking for a short-term investment, an investment in our Money Market Fund would be more suitable.
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Where do I start?
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New investors are advised to invest in a general fund, as this ensures that their capital is more widely spread.
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How do I invest in Sanlam's collective investments?
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You can invest online by simply clicking here.
Alternatively, a signed registration form is needed in order to open an account. If you require a debit order investment, please complete the debit order instructions on the registration form to enable us to arrange the debit order payments with your bank. If you are investing a lump sum, you have the following options:
- Forward a cheque in favour of Sanlam Collective Investments (which should be crossed and marked non-transferable) to Sanlam Collective Investments, PO Box 30, Sanlamhof 7532.
- Please complete the once-off debit order details on the registration form. The lump sum will be deducted from your bank account and invested as at the price date we have received the instruction.
- Deposit the monies directly into our bank account and fax the registration form together with all other required documentation as listed on the registration form and a copy of the deposit slip to us on +27-21-947-8224.
Our bank details:
- Bank: ABSA
- Account name: Sanlam Collective Investments Ltd
- Account no: 01023002341
- Branch name: Sanbel
- Branch code: 523410
- Reference: Your identity number
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Do I need any knowledge of the stock exchange?
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No, that is not necessary. A portfolio manager and a team of experts carry out ongoing research and decide on the investments to be included in the fund's portfolio. In this way you have the opportunity to share in the growth potential of the Johannesburg Stock Exchange without necessarily being an expert.
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Why does Sanlam have so many funds?
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When it comes to equity investments people's preferences differ – some prefer a portfolio that focuses on specific shares, others feel more comfortable with a wide spread across the entire market spectrum. We would like to meet as many of our investors' investment preferences as possible.
We offer investment solutions (funds) that satisfy the needs and requirements of our clients, giving them a choice of single- and multi-manager solutions, local and offshore, across all identified risk profiles and asset classes.
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May I invest in all of them?
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Yes, you may invest in any one of our funds or in all of them.
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Which fund should I choose?
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This depends on your investment needs and objectives and the amount of risk you are willing to accept. Our Client Contact Centre, at (021) 916 1800, has information on all our funds and your personal adviser will also be able to help you with your choice.
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How much does it cost to invest?
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An initial charge is payable. This varies from as little as 0,5% (excl. VAT) for our fixed interest funds up to a maximum of 5% (excl. VAT) for some of our equity funds.
The initial costs will be deducted from the amount invested and will be disclosed when buying units. The maximum initial costs payable on a fund is published in the newspapers on a daily basis and is also obtainable from the manager.
The price you pay on your units - called the net asset value price (NAV) - also includes annual costs. This fee also differs for interest funds and equity funds.
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Is the cost lower for larger investments?
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All the fees are the same for small or large investments. |
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How much must I invest?
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- Domestic Equity funds: the minimum investment is a R5 000 lump sum and R200 recurring.
- Fixed-interest funds: the minimum is a R20 000 lump sum and R1000 recurring.
- Foreign funds: the minimum lump sum is R5 000 and R500 recurring.
- The minimums applicable to a specific fund is available on the fund's fact sheet.
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How do I pay?
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By means of a once-off debit order at any branch of ABSA or First National Bank. Phone our Client Contact Centre on (021) 916 1800 for further details. |
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What is better: a recurring investment or a lump sum?
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With a lump sum you can choose a time when prices are in your favour to get the best possible growth over the investment term. This requires expertise and good timing. A regular investment, of a fixed amount every month for instance, offers you the benefit of rand cost averaging. This means the average cost per unit will be less than the average of the prices at which the units were purchased over the same period. |
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May I change the size of my recurring investment?
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Yes, it may be increased or reduced according to your needs. You can simply pay the new amount or instruct us in writing or telephonically to adjust your debit order. Please take note of the minimum investment amount for each fund. |
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May I switch from one fund to another?
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Yes. A difference in initial charge is payable if the target fund's charges are greater than the source fund's charges. If there is no difference in charges, then a maximum of R25.00 switching fee is payable. The R25.00 switching fee is waived for all switches done via our online transaction facility, Secure Services. |
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What proof do I have of my investment?
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You will receive a purchase advice as proof after every initial investment and additional lump-sum payments. You will also receive a Statement of Transactions every six months and an abridged annual report at the end of May each year, containing particulars of the fund portfolios. |
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Do I receive an income on my investment?
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Yes, the income is earned from dividends on the shares and interest on the bond and cash investments. The net income received is divided equally among the number of units in issue. |
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When does my fund declare income?
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Most of Sanlam's funds declare income twice a year. However, the Income Fund, SIM Active Income Fund, SIM Managed Conservative FoF, SIM Managed Cautious FoF and Property Fund declare income every quarter, the Money Market Fund, Alternative Income Fund & Enhanced Cash Fund every month, and the SIM Global Best Ideas Feeder Fund once a year. |
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Should I reinvest income?
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Yes, definitely, unless you require it for something else. Simply reinvest your income and additional units will be purchased for you in the fund of your choice. |
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How do I sell my units?
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By instructing us in writing to do so. We will repurchase your units at the price applicable on the date on which we receive all the required documents (a repurchase form, all unit certificates). No costs are payable to sell your units. |
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Are my units transferable?
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Yes, just like ordinary shares. |
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May I offer units as security?
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Yes, by pledging your investment to the institution. You may then not deal with the investment until such time as the pledge has been cancelled. |
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Does a collective investment in securities offer tax benefits?
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- Capital growth: Investors pay capital gains tax on 25% of the capital gains, less an annual exemption of R15 000.
- Interest: Income earned from interest is exempt from tax in a few instances. The first R18 000 of all interest earned by an individual younger than 65, is exempted (R26 000 if older than 65).
- Dividends: Dividends earned on South African investments are tax-free, but foreign dividends are taxable.
- An amount of R3 000 of foreign dividends and foreign interest received is exempted out of the total exemption amount. First deduct foreign dividends and then foreign interest. The balance is applicable to local interest earnings.
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What about inflation?
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In the long term, the returns on Sanlam's funds have been higher than the inflation rate. Naturally, this compensates for the negative effects of inflation. |
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What will happen to my investment in the event of death?
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You may bequeath your investment like any other assets in your will. |
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May I invest in someone else's name?
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Yes, but note that ownership is transferred fully to the registered unitholder(s) – only he/they may deal with the investment. |
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Can collective investments in securities be registered in the name of a minor (person younger than 18 years)?
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Yes. The minor is regarded as the legal owner and all documents are to be signed by a parent or legal guardian if the minor is younger than 14. Children older than 14 must sign themselves, assisted by a parent or legal guardian. |
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Can I transfer my investment to someone else (for example, my husband/wife, children, grandchildren)?
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Yes. In the past securities transfer fees of 0.25% of the market value of the investment was payable, but this has since been abolished. |
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Can a beneficiary be nominated on my investment?
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No. The value of your units forms part of your estate and is left to your heirs, in accordance with the provisions of your will. |
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