ETF Tax Free Investment Accounts

Transcription

1 ETF Tax Free Investment Accounts Tax free accounts using only low cost, transparent and liquid ETFs as components. Low Costs 1% per annum includes VAT; total administration, including quarterly reinvestment of dividends; portfolio management; and advisory fees. All transaction costs are also included in this fee. The 1% cost is deducted on a quarterly basis over a 12 month period. Selection of four ETF portfolios offered, giving differentiated exposures and risk profiles. You can also invest in individual ETFs in your Tax Free Account, if required. Modular design allows for contributions from R1000 into an ETF portfolio at any time, and for contributions into individual ETFs from R300 per ETF, up to a maximum of R per tax year. Contributions into portfolios of individual ETFs can be accommodated on a debit order or lump sum basis. A maximum lifetime contribution to Tax Free Accounts of R per person is permitted. Tax free accounts fully compliant with Section 12T of the Income Tax Act. Administrator Computershare (Pty) Ltd. Portfolio Managers and Financial Advisers etfsa Portfolio Management Company (Pty) Ltd. Please contact etfsa.co.za should you require any further information or detail. Tel: ; taxfree@etfsa.co.za. 1 Page November 2017

2 TAX FREE PORTFOLIOS FOR 2017/2018 TAX YEAR ETF TAX FREE INCOME PORTFOLIO This portfolio is targeted at low risk investors who wish to receive the income earned in the interest earning and high dividend ETFs that make up this portfolio. NewFunds TRACI ETF (10%) Global Property ETF (30%) This portfolio is expected to earn a dividend/interest income of some 7,4% in the 2017/2018 tax year. Some capital gains/losses can occur from the investment in property shares. All income earned from quarterly dividends is automatically reinvested in the portfolio. PropTrax Ten ETF (30%) All interest/dividends and capital gains earned in the portfolio is not taxed. PrefTrax ETF (30%) Historic Performance The theoretical historic performance of the Income Portfolio is based on the selected ETF allocations and reference index performance of the ETFs chosen for this option, as detailed above. last three years: 14.0% last five years: 15.5% Note: Past performance is no guarantee of future returns ETF Tax Free Investment Accounts can be structured with a percentage allocation to more than one of these four portfolios, but with a minimum contribution of R1,000 per portfolio. 2 Page November 2017

3 ETF TAX FREE BALANCED PORTFOLIO This portoflio is for medium-risk, long term investors and equally balances exposure to interest rate instruments - SA Government inflation-linked bonds and local property shares - with an investment in global and local equity markets. Low cost, high efficiency ETFs, are used to give exposure to this asset allocation mix. No taxation is incurred on the dividends/interest and capital gains earned in this portfolio. All dividends are automatically reinvested. Sygnia/Itrix MSCI World ETF (25%) PropTrax Ten ETF (25%) Ashburton Govt. Inflation Linked ETF (25%) SA Top50 ETF (25%) Historic Performance The theoretical historic performance of the Balanced Portfolio is based on the selected ETF allocations and reference index performance of the ETFs chosen for this option, as detailed above. last three years: 10.4% last five years: 13.7% Note: Past performance is no guarantee of future returns ETF Tax Free Investment Accounts can be structured with a percentage allocation to more than one of these four portfolios, but with a minimum contribution of R1,000 per portfolio. 3 Page November 2017

4 ETF TAX FREE EQUITY PORTFOLIO This portfolio invests in local and international ETFs giving exposure to the equity market only. It has medium-to-high risk and is suitable for investors with a longer term investment horizon. Equities, over time, are the best asset class in which to realise long-term capital gains, which of course, are not taxed in such accounts. Sygnia/Itrix MSCI World ETF (30%) DivTrax ETF (20%) Satrix RESI ETF (20%) The portfolio invests 30% in the DBX World ETF, which covers over 1600 companies in the 24 major global stockmarkets and invests Satrix INDI ETF (30%) the balance of 70% in the industrial and resources indices in the South African market, as well as a high dividend earning portfolio. All dividends are automatically reinvested on a quarterly basis. Historic Performance The theoretical historic performance of the Equity Portfolio is based on the selected ETF allocations and reference index performance of the ETFs chosen for this option, as detailed above. last three years: 11.3% last five years: 18.0% Note: Past performance is no guarantee of future returns ETF Tax Free Investment Accounts can be structured with a percentage allocation to more than one of these four portfolios, but with a minimum contribution of R1,000 per portfolio. 4 Page November 2017

5 ETF TAX FREE INTERNATIONAL PORTFOLIO This portfolio is relatively high risk, because of its 100% exposure to international equity markets and to the volatility of the rand exchange rate. However, it is a pure rand hedge portfolio, so can be suitable to protect investors against rand depreciation. JSE listed foreign ETFs, that give direct exposure to major international equity ETFs, are used for this portfolio. These inward investment listed ETFs are the most cost effective manner to invest in global equity markets, Global Property ETF (20%) Sygnia/Itrix MSCI Japan ETF (15%) Sygnia/Itrix MSCI Eurostoxx 50 ETF (15%) S&P 500 ETF (50%) available to the South African investor. Foreign dividends are received twice a year and are reinvested, free of tax. All dividends and capital growth is completely tax free. Historic Performance The theoretical historic performance of the International Portfolio is based on the selected ETF allocations and reference index performance of the ETFs chosen for this option, as detailed above. last three years: 9.9% last five years: 19.9% Note: Past performance is no guarantee of future returns ETF Tax Free Investment Accounts can be structured with a percentage allocation to more than one of these four portfolios, but with a minimum contribution of R1,000 per portfolio. 5 Page November 2017

6 ETF TAX FREE SELECT-YOUR-OWN ETF PORTFOLIO (should you not wish to use our ETF Tax Free Portfolios) National Treasury appears to be allowing investment in single Collective Investment Schemes (Unit Trusts and ETFs), and not only in portfolios of such Collective Investment Schemes (CISs). This was not clear at the time of the introduction of Section 12T of the Income Tax Act in March Accordingly, we can allocate your lump sum or debit order investment into any one of the qualifying ETFs that are available on the JSE. This includes foreign ETFs, local equity and bond ETFs, or listed property ETFs, but excludes commodity ETFs as they are not registered as Collective Investment Schemes (CIS). You can also opt to switch existing portfolios to this option. A list of eligible ETFs for such free selection portfolios, is listed below. JSE Share Code ETF Name Domestic (SA) Equities CIS Compliant ETFs ETF Provider JSE Share Code ETF Name Domestic (SA) Interest Bearing Broad-based large cap NFGOVI NewFunds GOVI ABSA GIVISA NewFunds S&P GIVI Top 50 ABSA NFILBI NewFunds ILBI ABSA NFSH40 NewFunds Shari ah Top 40 ABSA NFTRCI NewFunds TRACI 3month ABSA ETF Provider NFSWIX NewFunds SWIX 40 ABSA ASHINF Ashburton Government Inflation Ashburton ASHT40 Ashburton Top 40 Ashburton PREFTX PrefTrax Grindrod CSEW40 EW Top 40 Grindrod STXILB Satrix Inflation-Linked Bonds Satrix CTOP50 Top50 Grindrod Domestic (SA) Listed Property STX40 Satrix 40 Satrix PTXSPY PropTrax SAPY Grindrod STXRAF Satrix RAFI 40 Satrix PTXTEN PropTrax Ten Grindrod STXSWX Satrix SWIX 40 Satrix STXPRO Satrix Property Satrix STAN40 Stanlib Top 40 Stanlib STPROP Stanlib SA Property Stanlib STANSX Stanlib SWIX Top 40 Stanlib Domestic (SA) Multi Assets SYGT40 Sygnia/Itrix Top 40 Sygnia MAPPSG NewFunds MAPPS Growth ABSA SYGSW4 Sygnia/Itrix SWIX 40 Sygnia MAPPSP NewFunds MAPPS Protect ABSA Sectors International Listed Property GIVFIN NewFunds S&P GIVI SA Financial ABSA GLPROP S&P Global Property Grindrod GIVIND NewFunds S&P GIVI SA Industrial ABSA SYGP Sygnia/Itrix Global Property Sygnia GIVRES NewFunds S&P GIVI SA Resources ABSA International Equities ASHMID Ashburton MidCap Ashburton ASHGEQ Ashburton Global 1200 Ashburton STXFIN Satrix FINI 15 Satrix AMIB50 AMI Bi50 ex-sa Cloud Atlas STXIND Satrix INDI 25 Satrix CSP500 S&P 500 Grindrod STXRES Satrix RESI 10 Satrix STX500 Satrix S&P 500 Satrix Style / Factors / Smart STXEMG Satrix MSCI Emerging Markets Satrix NFEMOM NewFunds Equity Momentum ABSA STXWDM Satrix MSCI World Satrix NEWFSA NewFunds NewSA ABSA SYGEU Itrix Eurostoxx 50 Sygnia DIVTRX Dividend Aristocrats Grindrod SYGUK Itrix FTSE 100 Sygnia LVLTRX Low Volatility Grindrod SYGJP Itrix MSCI Japan Sygnia STXDIV Satrix Dividend Plus Satrix SYGUS Itrix MSCI USA Sygnia STXQUA Satrix Quality South Africa Satrix SYGWD Itrix MSCI World Sygnia SYG500 Sygnia/Itrix S&P 500 Sygnia Note: ETFs that are not registered as Collective Investment Schemes (CIS) with the FSB, may not be used in tax free accounts. There are currently 52 ETFs listed on the JSE that qualify for investment in Tax Free Accounts. ETF Tax Free Investment Accounts can be structured with any number of eligible ETFs, but with a minimum contribution of R300 per ETF. 6 Page November 2017

7 To Summarise the New Portfolio Offerings for 2017/ You can use these new portfolios, or the single ETF options, for any investment in the ETF Tax Free Investment Account after 1 st March Your existing portfolio investment for 2016/2017 will NOT automatically be switched to the new portfolios for 2017/2018. Please advise us if you want to make a different selection using either the four portfolios presented above, or individual ETFs. We will make such changes at no charge. 3. From 1 st March 2017, the annual contribution rises to R per year. If you have a debit order of R2 500 per month in place and want to raise this to R2 750 per month to take up the full R per year allowance, please complete a debit order amendment form. 4. The single ETF option is available for the full lump sum investments of R per year, or for portions of the R which can be invested periodically in lump sums or debit orders. You can switch from this selection option into any of the ETFIA portfolios, if you wish, at any time in the future, or vice-a-versa. 5. You can choose more than one ETF for the Select-Your-Own ETF option, provided the minimum investment per ETF is at least R300. FEES 1% ALL-IN INVESTMENT AND ADMINISTRATION COST Portfolio Management and Advice Fees Administration and Custody Fees Rate per annum 0,5% (incl. VAT) 0,5% (incl. VAT) All transaction fees for ETF portfolio purchases, reinvestment of dividends, etc. are included in the total fee of 1% per annum. The following is not included in the 1% total fee: Out of pocket expenses such as postage (where applicable), specific bank charges on cheque clearance, cash deposit or debit order fees will be deducted from your deposit. Should you choose to make a withdrawal from this account, the transaction costs and related charges will be deducted from the amount paid out. WHAT YOU CANNOT DO WITH ETF TAX FREE ACCOUNTS Transfer directly from other investments. The Tax Free Accounts require new money, so you would need to sell your old investments and transfer cash to the ETF Tax Free Investment Account. Transfer between different Tax Free Account service providers this has been postponed by National Treasury to 1 st of March Sell and then reinvest the proceeds on a tax free basis, in the same tax year. 7 Page November 2017

8 DISCLOSURE Computershare (Pty) Ltd is the Administrator of the ETF Tax Free Investment Account. Computershare is a registered Central Securities Depository Participant ( CSD Participant ) and has a Financial Services Provider Category I and II Licence to provide intermediary services (FSP No 760). etfsa Portfolio Management Company (Pty) Ltd is the Portfolio Manager and Financial Adviser. etfsa Portfolio Management Company is a division of etfsa Investment Services (Pty) Ltd, a Category II Financial Services Provider, for advisory and intermediary services for Collective Investment Schemes and JSE listed securities (FSP No 40107). Michael Fitzclarence Brown, trading as etfsa.co.za, is a Financial Services Provider (FSP No 39217), to provide financial adviser services for Collective Investment Schemes and JSE listed securities. CONTACT DETAILS Computershare Administrator Street Address Postal Address & Telephone Rosebank Towers 15 Biermann Ave, Rosebank, Johannesburg 2196 Private Bag X17 Marshalltown 2107 etfia@computershare.co.za Tel: Fax: etfsa.co.za - Portfolio Manager and Adviser Street Address Postal Address & Telephone 79 Oxford Road Saxonwold 2196 P O Box 36 Cresta 2118 taxfree@etfsa.co.za Tel: Fax: Page November 2017