Benefits of ETFs

THERE ARE NOW ETFs LISTED ON ALL MAJOR JSE INDICES

• Examples of ETFs in South Africa include the ALSI 40, FINI, INDI, and the ITX FT100
• The asset manager fully replicates these indices at all times, by holding the index shares in the exact weighting and number that FTSE/JSE use to calculate the index. As the Index level changes, so does the price of the ETF securities throughout the day.
• Each ETF pays out all dividends received from the companies that make up the index being tracked, thus ensuring regular cash flows to investors.
• Scrip lending income received from the shares held in the various trusts, lent to FSB approved borrowers, covers the bulk of the ETF’s costs.
• ETFs have very low cost structures. All trading of the securities takes place on the JSE. Operating expenses are covered through scrip lending income and focuses on delivering the index market performance, net of costs. If you buy any ETF directly on the JSE, the transaction costs are the only fees paid by investors. There are no annual or quarterly management costs, advisory fees or administration costs.
  

WHAT ARE THE BENEFITS TO INVESTING IN PROPERTY INDEX TRACKER?

Accessibility

Tracking an index through a direct investment in its constituents is very difficult, particularly for a small investor. To track the Index effectively, investors need to monitor the Index and any index developments on a daily basis. All constituents of the Index have to be traded individually and interest, dividends and other distributions have to be managed whenever paid. Property Index Tracker participatory interests confer on the holder of one Property Index Tracker security a proportionate share in the economic benefits of all of the securities issued by the constituent companies comprising the Index. Property Index Tracker securities are attractive to professional investors, providing a useful asset allocation and cash management tool.

Liquidity and tight spreads

Given that Property Index Tracker securities are listed instruments, they are capable of being bought and sold on the JSE through a JSE member. Property Index Tracker securities trade all day, just like any other listed security on the JSE. In addition, you can sell your participatory interests to the manager, which will buy it from you, or procure its purchase by the market maker.

Further, the market makers will attempt to maintain a high degree of liquidity through continuously offering to buy and sell Property Index Tracker participatory interests at prices around the NAV of the participatory interest, thereby ensuring tight buy and sell spreads. You will under normal circumstances and conditions be able to buy Property Index Tracker securities from or sell them to the market makers.

The most transparent way to invest

The exact composition of the Index, the NAV of the Property Index Tracker participatory interests and the market price thereof will be published daily on the Property Index Tracker website. This allows an investor full price transparency and the ability at any time to compare the traded value of Property Index Tracker participatory interests with the actual value of the corresponding constituent securities at any time.

Low cost

Investing in Property Index Tracker participatory interests is an efficient way of gaining diversified equity market exposure at low costs while avoiding the costs and risks associated with active investment management.

Scrip lending income received from the shares held in the trust, lent to FSB approved borrowers, helps to cover the bulk of costs.

Flexibility

After the listing on the JSE of the Property Index Tracker participatory interests, an investor will be able to purchase as few as one participatory interest on the secondary market.

Approved Investment

Property Index Tracker Managers (Pty) Ltd is registered with the Financial Services Board (FSB) as the manager of a collective investment scheme in terms of the CIS Control Act (2002).

Falling under the CIS Act ensures that Property Index Tracker is an approved investment for pension and retirement fund managers, and that it operates on a level playing field with other investment products (such as unit trusts) in terms of tax treatment and regulatory requirements.