Unit trusts for the net savvy

Illustration: Colin Daniel

Illustration: Colin Daniel

Published Oct 25, 2011

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Unit trust companies’ websites offer a number of services to do-it-yourself investors, but, in order for you to sign up as an investor, you may have to go offline to provide a signature or submit documentation to verify your identity.

Units in unit trust funds can be bought and sold only during office hours, so, although you can fill in application forms at any time, your instruction will be effected only during working hours.

We asked five unit trust companies – Absa (www.absainvestments.co.za), Allan Gray (www. allangray.co.za), Coronation (www.coronation.com), Foord (www.foord.co.za) and Investec (www.investec assetmanagement.com) – about their online services.

Your first reason to visit a unit trust company’s website will be to find out about its fund offering. All companies publish (monthly or quarterly) fund fact sheets on their sites to help you to decide in which funds you should invest. These fact sheets are relatively easy to find online and contain essential information about a fund, from its minimum investment amounts and fees to the asset allocation or fund holdings.

To help you choose funds, Coronation has an online tool that takes you through the company’s fund range and determines your broad investment needs – such as to invest for growth, for income or for income and growth.

Coronation’s fund comparison tool enables you to compare up to five funds on their objectives, exposure to growth assets, risk measures, ideal time horizon for investing, asset classes, fees, performance and other information, such as investment minimums.

Paul Cluer, the managing director of Foord Unit Trusts, says Foord is revamping its website and plans to offer a function to compare funds soon.

Allan Gray has a “Help for first-time investors” section that guides you through not only the funds on offer, with comments about their suitability for you and their equity exposure, but also the products - such as retirement annuities (RAs) and endowment policies – in which you can house the funds.

Fund performance data can be found on fact sheets, but many companies – in this sample, Allan Gray, Coronation and Foord – also make this information more readily accessible with a “Performance” link from their websites’ home page.

Allan Gray was the only company that stated that its performance data were after fees.

Once you have chosen a fund, a company’s website can usually offer only limited help with buying units in the fund. The main barrier that the companies cite to a fully automated online buying process is the requirement for the companies to obtain your signature and to know who you are in terms of the Financial Intelligence Centre Act (Fica).

All the companies offer online application forms that you have to complete to become an investor, and all but Absa say that you, as a first-time investor, must download, print and sign these forms. Then you have the option of faxing the forms, or of scanning and emailing them, to the company, together with the relevant Fica documents.

Wayne Dicks, the general manager of unit trusts at Absa Investments, says that no application forms are required if you are an Absa internet bank client – you can invest in the company’s unit trusts via the “My Absa” icon on the bank’s website (www.absa.co.za).

If you are not a client of the bank, you will have to open an account and visit an Absa branch with your identification documents to activate your password before you can buy funds online.

Michael Summerton, the head of client experience at Allay Gray, says that after the initial offline application, investors can use their online account to upload supporting documents.

Cluer says that Foord’s new website will allow you to complete the application form online, but you will still have to print out the form and sign it before you send it back to Foord.

Pieter Koekemoer, Coronation’s head of retail, says that Coronation’s “Invest now” section includes an automated application process that generates a copy of the application form that is emailed to you for you to print out, sign and send back.

Thabo Kojane, the managing director of Investec Asset Management, says that after an initial offline application, the online forms are quick and easy to complete. You can also check, with a few mouse clicks, the status of the forms you have submitted.

An instruction you submit online or via fax or email may be processed on the same day or you may have to wait until the next day for it to be processed.

Cluer says that if you send an investment instruction before 2pm on a working day, Foord will buy your units at 3pm on the same day. If you send an instruction later or on a weekend or a public holiday, you will have to wait until the next working day before your units are purchased.

If you invest via a debit order, Cluer says, you will have to wait an additional day, as the debit order file must be loaded on the first day and executed on the second day before the units can be issued on that day.

Koekemoer says that Coronation loads debit orders on fixed dates each month. One-off debit orders or electronic collections of lump sums take four business days to carry out.

Summerton says that Allan Gray’s cut-off time is 2pm for local funds, but the cut-off times for offshore funds vary.

Dicks says that any Absa fund instruction received before 4pm is processed that day at the price determined at 4pm. Instructions received after 4pm are processed at the next day’s 4pm price. Once you have invested with any of the unit trust companies, you will enjoy quick online access to the balance of your portfolio, which is updated with each day’s prices and transactions. Statements can be viewed online and/or downloaded, and most companies offer access to current and historic statements.

Dicks says that Absa online users can view their consolidated investment portfolios from the “My Absa” link on the bank’s website. Values of accounts that show transactions from the previous day appear on the site at 8am the following day.

Summerton says that Allan Gray’s website usually reflects updated prices after 7pm each trading day.

He says that Allan Gray investors can obtain the asset allocations for their investments. This is useful if you are a retirement fund member who has to comply with the limits in regulation 28 under the Pension Funds Act. Allan Gray’s regulation 28 calculator also helps retirement fund members to choose a combination of unit trusts that complies with the regulation.

Allan Gray investors can also view a graph of the performance of their fund compared with the inflation rate, cash and the FTSE/JSE All Share index.

Cluer says that statements of distributions paid to you can also be obtained on Foord’s site.

Koekemoer says that Coronation investors can link their different investments to a single log-in. This is particularly useful for investors who have accounts in the names of their children or a family trust, he says. You can also link different types of investments you have with Coronation – for example, a local unit trust, an international unit trust, an RA, a living annuity or a preservation fund.

Kojane says that on Investec’s site you can use interactive charting tools to compare your fund’s performance with other funds (those of Investec and other providers), key indices and the related sectors.

Giving your unit trust company instructions to buy, sell and switch your funds is also much easier if you are net savvy. Generally, you can issue instructions online to:

* Buy into new funds;

* Make additional investments;

* Redeem funds;

* Switch funds;

* Amend debit order instructions;

* Change your income distribution instructions;

* Change your banking details; and

* Change your personal details (for example, telephone numbers or email addresses).

If you change any details that affect the Fica requirements - for example, if you change your address – you may again have to fax or email the relevant documents to prove the change.

Foord is the exception. Cluer says that online transactions are not available on Foord’s site but are being investigated for the new website.

Dicks says that Absa investors can obtain immediate access via the internet 24 hours a day to funds in the Absa Money Market Fund as long as the money is transferred to an Absa account. Most companies also offer you the ability to request the statements that you need to declare taxable income or taxable capital gains.

Dicks says Absa offers reduced initial fees if you invest in Absa funds online. Allan Gray, Coronation, Foord and Investec do not charge initial fees.

Foord offers a “What if” feature that allows you to calculate the present value of a notional investment made at a historic date of your choice (using actual past returns after deducting fees and costs).

Investec’s website offers you access to podcasts of up-to-date interviews with its portfolio managers.

Absa, Allan Gray and Investec also offer linked-investment services provider platforms that give you access to funds other than their own. The use of such platforms usually involves an additional charge.

This article was first published in the third-quarter 2011 edition of Personal Finance magazine.

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