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New online platform to shake up unit trust industry

By Staff Writer
investonline.co.za has launched South Africa's first online portal that enables customers to invest in a comprehensive range of unit trusts in a cost-effective, convenient and user-friendly way, while providing them with independent advice to ensure they choose the funds which best meet their specific investment needs.

investonline.co.za is headed up by Nick Brummer, former director at HSBC Securities and Deutsche Securities, and fellow director Rod Lowe, former wealth management specialist at Nedbank Private Bank, HSBC Securities and Syfrets Private Bank. Each has 20 years experience in the South African financial services industry, with strong track records, making them well-placed to provide independent investment advice to clients.

According to Brummer, the company aims to change the way retail investment products are sold in South Africa.

He says that one of the key benefits of investing via an online platform is the much cheaper cost structure. "investonline.co.za has no upfront fees as we pass on the wholesale price of unit trusts to our clients. This provides substantial savings compared with traditional investment advice routes, who typically charge between 2% to 3% upfront."

Only A class unit trust funds are used by investonline.co.za which means there is no layering of fees and any rebates negotiated with the various unit trust management companies is passed back entirely to the investing client.
Brummer says that by removing the upfront fee consumers are effectively now in charge of their own investment portfolios via the website. "Not only do we offer transparent access to a range of underlying unit trust funds, but clients are also able to switch freely between underlying funds and to construct portfolios at a very cost-effective price."

The company has structured a range of risk profiled and diversified unit trust investment portfolios from the top-performing unit trust providers in South Africa, including Allan Gray, Coronation Fund Managers, Flagship, Foord, Futuregrowth, Investec, Nedgroup Investments, Prudential, RMB, Sanlam Investment Management and Stanlib. The minimum monthly debit order is R2,000, while the minimum lump sum investment is R20,000.

While clients can choose from any major unit trust provider, the underlying investment platform is managed by Allan Gray Investment Services, who provide all administration services to clients, such as payment collection and regular reporting updates.

"We have also developed a personalised Risk Profiler tool - which is mandatory for clients to ensure they invest in the correct underlying portfolio of funds that best suits their specific objectives", says Lowe.

"The advantage of using this tool is that it takes any emotion out of choosing unit trust investment products for a client. Depending on the risk profile of the investor, we can advise on the right suite of unit trust funds. This means that our clients are able to benefit from the cost savings of transacting through an online platform, while still ensuring that they are invested in a manner which is appropriate to their personal risk profile and goals."

According to Lowe, South Africans have already benefited hugely from the emergence of online competitors in the insurance and travel space. "We are confident that the same will be true of retail investment products sold online."

The internet space in South Africa is currently growing at a huge rate. Statistics recently published by World Wide Worx revealed that the number of internet users in the country grew 15% to 5.3-million in 2009. This level of growth is expected to continue, reaching 6-million users by the end of 2010.

"While there will always be a space for traditional sales channels, we are confident that there is a significant market of South Africans who are ready to benefit from the many advantages of investing via an online platform" says Lowe.

Want to learn more about unit trusts and investonline? Click here!

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