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 Rating agencies may come knocking

It is only the middle of February, but the rand has already made two big moves. The first was the rand moving from R14.60 to R 13.20 at the beginning of the year, as emerging markets (EM) became fashionable again. The second was where the rand gave away nearly 90 cents in 2 weeks as the EM rally ran out of steam, and local events started to hit the headlines.

Read more

The cost of sending money home to neighbouring countries

Transferring money home within the Southern African Development Community (SADC) provides vital financial support for many households in neighbouring countries.

Read more

Student bank accounts: Which come out on top?

Being a student signals budgeting and not having a lot of money at your disposal. This means streamlining expenses such as your grocery costs and entertainment budget. But what if your bank account is in fact costing you more than you can afford?

Read more

Can you afford an ambulance in South Africa?

When a loved one is straddling the line between life and death, you won’t hesitate to call an ambulance. This week, Justmoney found out how much an ambulance ride costs in South Africa, whether you can refuse to get into an ambulance, and who pays the bill if you’re unconscious. 

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

President Hotel Easter Special

Price: From R1,500
When: 15 March to 30 April
Where: Cape Town

Kulula-Preskil Island Resort Special

Price: R16,999
When: 11 May -14 September
Where: Mauritius

A Touch Of Madness Tuck In Tuesday Special

Price: R70
When: Tuesdays
Where: Cape Town