Guiding consumers since 2009

DB X-trackers set to cut Exchange Traded Fund Fees

By Staff Writer
The Deutsche Bank-sponsored range of Exchange Traded Funds (ETFs), DB X-trackers, has cut its management fees on its JSE- listed ETFs. DB X-trackers comprises of   five ETFs, each linked to an offshore index.
 
ETFs are passive investment structures designed to track the performance of specific indices, delivering market performance at affordable rates as investors don’t have to pay a premium on the promise of excess returns to the market.
 
ETFS generally have lower charges than actively managed investment products.
Sasfin financial consultant, Gavin Came, said ETFs are a cheaper alternative to investing in unit trusts and an affordable way to get into the market.
 
Wehmeyer Ferreira from Deutsche Securities said fee reductions were made possible by economies of scale resulting from asset growth.
 
“By the end of May, our funds achieved over 60% asset growth. Total assets under management (AUM) topped at R3.195 billion and we project strong continued net inflows.

A key element in our market strategy is the affordability of ETF fees versus actively managed alternatives and, as we have reached critical mass allowing economies of scale, we have chosen to reduce our fees,” said Ferreira.
 
Ferreira said there were several reasons behind local growth:
 
Greater understanding of the advantages of exposure to passive investments like tracker funds as history shows most actively managed funds fail to beat the market average over the long haul.
 
Greater cost sensitivity by investors who now realise total returns are greatly reduced once fees are subtracted.
 
Greater appreciation of the benefits of international diversification as a strategic imperative when portfolios are being constructed.
 
Rand weakness – underlining the benefit of exposure to offshore markets with stronger foreign currencies.

In a statement, Mike Brown, managing director of Exchange Trades South Africa said rand hedge investments, particularly the DBX Tracker ETFs, which invest directly in global equity markets but trade as "inward investments" in rands on the JSE, offer not only investor protection but also the means to profit from rand depreciation.
 
Would an ETF investment suit you?
 
Despite its affordability compared to actively managed funds, Came doesn’t believe an ETF suits all investment portfolios.
 
An ETF investment could, for example, be beneficial to a young investor who has enough capital to spare, but Came warned that you should not put all your money into one type of investment.

He added that there are up to 150 different types ETF’s available so you should always speak to your financial advisor before you choose one.

Recent Articles

Featured Fuel rewards programme – how to fill up on petrol and points

South Africa’s volatile economy has often meant that factors like the fuel price bear the brunt. This year alone the country’s fuel price has fluctuated by between R1.50 to almost R3, which has put increasing pressure on motorists. That said, many of the bigger South African brands have provided some relief by way of fuel rewards programmes.

Are you entitled to your spouse’s pension after divorce?

Divorce means more than just parting ways with your partner. It may also involve parting ways with your assets. The Divorce Act states that your retirement fund forms part of your assets. This means that it will be considered when dividing up your assets.

Retrenched – which payments are you entitled to?

In the current struggling economic climate, retrenchments are a regular occurrence and not everyone survives the cut. If you find yourself on the receiving end of retrenchment you may have questions about the payments that are due to you.

Do you want to settle your debt?

You may be considering settling your credit account, whether it’s a credit card or various store accounts, now may be as good a time as any. This especially if you have saved, or you received a tax return or salary bonus. 

Deals

Builders Black Friday Special

Price: R5000
When: Until 29 November 2019
Where: Online

Café Rousse Monday Special

Price: Available on request
When: Mondays
Where: Nationwide

Skye Bar Mojito Special

Price: R55
When: Until 31 December 2019
Where: Johannesburg