FAQs for Global ETFs 1. What is STANLIB Index Investments? STANLIB Index Investments is a leading provider of passive solutions in South Africa, with over R40 billion of assets under management. STANLIB Index Investments is part of the Standard Bank, Liberty and STANLIB group of companies. The experienced team specialises in designing and managing index, smart beta and quantitative investment strategies. The team has been managing money in similar strategies since 1995, and has over 70 years of collective experience in financial markets. 2. Are the funds FSB approved and regulated? Yes. All the funds managed by STANLIB Index Investments are approved and regulated by the Financial Services Board (FSB). STANLIB is an authorised Financial Services Provider and adheres to the regulations and legislation of both the Financial Services Board and the Johannesburg Stock Exchange (JSE). 3. What is the difference between an ETF and a Unit Trust? Exchange traded funds (ETFs) are open-ended collective investment schemes that are listed on stock exchanges. They differ from unit trusts in the following way: ETFs can be bought and sold throughout the day on a stock exchange, like an ordinary share, through brokers or financial advisers during normal trading hours. Unit Trusts are traditional collective investment schemes that are priced once a day and units are bought and sold from the investment management company. STANLIB Index Investments has a range of ETFs and UTs, covering various indices in local and global markets. ETFs are popular among both institutional and individual investors because of their diverse applications in building portfolios and controlling costs and risk. 4. What is an index fund? Index funds aim to track the performance of an index. An index represents a basket of securities with the amount of each security in the fund weighted as it is in the index. Index funds benefit investors as they are simple to use, transparent, flexible and offer low cost diversification. 5. What benchmarks do the funds track? The benchmarks are the same as the underlying tracking indices of the funds. The funds track the performance of widely used liquid indices that provide exposure to a broad range of securities around the world. Details of fund specific benchmarks can be found on STANLIB Index Investments fund fact sheets: https://indexinvestments.stanlib.com/ourproducts/factsheets 6. What currency are the funds denominated in? South African rand.
7. Do the funds have foreign currency exposure? Yes. The funds allow instant access to securities in global markets. Investors will have exposure to the currencies that the underlying securities trade in. 8. Why invest in a global fund? The development of the world s economies and interconnectedness of its markets have made it attractive to invest a portion of a portfolio in global funds. High returns are not always found in local markets. Global funds offer investors the opportunity to invest in the fastest areas of economic growth and earn diversified returns in global currencies. STANLIB Index Investments global funds are low cost vehicles that offer access to global markets in a single fund. Local investors do not need to be experts in global securities or pay high costs to benefit from global investment returns. 9. Do I need foreign exchange clearance? No. The funds are onshore funds, which means that you will not need to use your foreign exchange limit or have foreign exchange clearance. STANLIB Index Investments funds give easy access to global markets but are domiciled in South Africa, denominated in South African rand and regulated by South African authorities. 10. Are the funds flexible? Yes. STANLIB Index Investments provides you with a variety of low cost global funds to suit both long-term core portfolios and shorter term tactical investing. You can build an entire investment portfolio using the STANLIB Index investments range of funds. ETFs allow instant access to global markets. 11. Where are the ETFs listed? The ETFs are listed on the JSE. 12. Does an ETF s trading volume affect its pricing and liquidity and are there liquidity risks? ETFs are listed on the JSE and can be traded at any time during market hours. The liquidity of an ETF does not depend on its trading volume. Instead, an ETF s liquidity is determined by the liquidity of its underlying securities. This is because of the way in which ETFs are created and redeemed by market participants in response to demand for ETFs. As demand for ETFs increases, the market participants create more ETFs from the securities featured in an ETF s benchmark index. As demand decreases, ETFs are redeemed. This ensures continual access to some of the world s largest securities. ETFs remain highly liquid provided the underlying securities required to build them are liquid. The underlying basket of securities of STANLIB Index Investments ETFs is chosen for their high liquidity characteristics. 13. Are the funds transparent? Yes. The underlying investments in the funds consist of the securities representing the fund s benchmark indices. Indexing is easy to understand and the underlying holdings, investment styles and targeted outcomes are publically available on fund fact sheets. 14. Why do these funds use a feeder fund structure? The global funds are feeder funds and therefore invest in a single Collective Investment Scheme portfolio. A feeder fund structure enables STANLIB Index Investments to manage the funds more efficiently in accordance with its mandate. Investors can therefore access broader global indices at a low cost.
15. Are dividends distributed to investors? The distribution status and declaration dates of the individual ETFs can be found on: https://indexinvestments.stanlib. com/our-products/factsheets 16. Can I reinvest dividends earned by my fund? Just like securities, most funds that distribute dividends make cash payments. The dividend treatment will depend on your agreement with your broker or adviser. If your broker or adviser offers a dividend reinvestment plan, you may be able to reinvest dividends in the fund. 17. Are the funds guaranteed or insured? The funds do not offer guaranteed returns. The value of the funds may be worth more or less than the amount originally invested. 18. How does my investment grow? The returns on your funds will reflect the returns of the basket of the underlying securities of the fund. The way your fund grows depends on the type of investments it holds. Any increase in the market value of the index basket will result in capital growth of the fund. Income and dividend distributions that are reinvested can increase the value of the investments. 19. What are the risks? All financial investments involve an element of risk taking. Investing can be risky as the return received is influenced by the daily movements of the market the fund has exposure to. Investing in global markets means currency risk will also constitute an element of portfolio return. The value of your investment will vary over time and your initial investment cannot be guaranteed. Past performance is not a guide to future performance and should not be the key driver of your product selection. The benefit of investing in funds that track an index, is that risks specific to a single security are minimised, as the fund is spread across a group of securities. They can therefore be used to reduce concentration risk in a portfolio by providing exposure to entire regions, markets or sectors. STANLIB Index Investments offers investors easy and instant exposure to returns from diverse securities, without the administration and costs of buying many global securities. 20. Why do the fund returns sometimes differ from the return of their benchmark indices? The funds are designed to produce returns in line with the returns of their benchmark indices. However, all index funds experience a small degree of tracking error which is the difference between the fund return and the index return. The main causes of the tracking error are: a. Fees The lower the annual management fee drawn from the fund, the lower the impact on tracking error. STANLIB Index Investments funds have a low annual management fees relative to traditional funds. b. Trading costs The lower the trading costs of the fund, the lower the impact on tracking error. STANLIB Index Investments funds have low levels of trading relative to active funds. c. Timing of pricing If the funds are priced at a different time of day to the benchmark index, there will be a difference in return. Income and dividend distributions that are reinvested can increase the value of the investments.
21. Are the funds long-term investments and how long should I stay invested for? Your investment horizon will depend on your investment goals. STANLIB Index Investments funds are excellent tools for implementing a variety of both long-term and short-term investment objectives. For example, funds can be used as core building blocks for long-term asset allocation, or they can be used to implement short-term tactical bets. 22. How can I invest? Investing in STANLIB Index Investments ETFs can be done via your broker or online share trading platform such as Standard Bank s Online Share Trading https://securities.standardbank.co.za/ost/. ETFs trade on stock exchanges in the same way as shares of publicly held companies. Investors can trade ETFs through their brokers or financial advisers the same way that they buy or sell stocks. There is no need to open a separate trading account. ETFs can be traded any time during normal trading hours. 23. Can STANLIB Index Investments ETFs be purchased or redeemed through STANLIB? No. ETFs cannot be purchased or redeemed through STANLIB. Instead, ETFs are traded through stockbrokers and financial advisers the same way that you buy and sell stocks. 24. Are there any expiry or maturity dates on ETFs? No. As with equities, ETFs can be held in perpetuity. 25. What is the minimum investment? There is no minimum investment for ETFs. However, only whole participatory interests can be purchased rather than fractions of a participatory interest. 26. Are there any initial charges or redemption fees for investing in the funds? There are no upfront fees or redemption fees charged on the purchase or sale of ETFs. ETFs are bought and sold on an exchange, so only customary transaction and brokerage charges apply. 27. How do the management fees of STANLIB Index Investments funds compare with those of traditional collective investment schemes? STANLIB Index Investments annual management fees and total expense ratios are lower than typical active funds. High asset management fees can significantly erode your wealth over time. STANLIB Index Investments keeps costs low and uses the power of compound interest to grow your money. 28. How much will it cost me to invest in the funds? You will be charged an annual management fee by STANLIB Index Investments. You can find more information on management fees in the fact sheets section of the STANLIB Index Investments website https://indexinvestments. stanlib.com/our-products/factsheets. For ETFs you will also be charged a brokerage fee by your broker on buying or selling the ETF. You may have to pay an advice fee to your financial adviser.
29. How will I be taxed? Any dividends received by the fund are subject to dividend withholding tax at a South African rate of 15% for taxpayers that are not exempt in terms of the Income Tax Act. Distributions received by the investors are net of dividend withholding tax. Investors will incur a capital gains tax liability on any capital gain realised at the time of sale. Investors should speak to their financial advisor for further information regarding taxation. 30. Can I include STANLIB global ETFs in a tax-free savings account? Yes, you can include all STANLIB ETFs in your broker s Tax-Free Investment Account, up to the allowable limits. Please speak to your broker or financial advisor if you need more information. For more information visit our website on www.stanlib.com/indexinvestments Disclaimer Collective investment schemes in securities are generally medium to long-term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. An investment in the participations of a collective investment scheme in securities is not the same as a deposit with a banking institution. Participatory interest prices are calculated on a net asset value basis, which is the total value of all assets in the Fund including any income accrual and less any permissible deductions from the Fund divided by the number of participatory interests in issue. Permissible deductions include brokerage, UST, auditor s fees, bank charges, trustee/custodian fees and the service charge levied by STANLIB Collective Investments (RF) Limited ( the Manager ). Where exit fees are applicable, participatory interests are redeemed at the net asset value where after the exit fee is deducted and the balance is paid to the investor. A portfolio of a collective investment scheme in securities may borrow up to 10% of the market value of the Fund to bridge insufficient liquidity as a result of the redemption of participatory interests, and may also engage in scrip lending. Where different classes of participatory interests apply to certain Portfolios, they would be subject to different fees and charges. A schedule of fees and charges and maximum commissions is available on request from the Manager. Commission and incentives may be paid and if so, would be included in the overall costs. The exposure limit to a single security in this Portfolio can be greater than is permitted for other Portfolios in terms of the Collective Investment Schemes Control Act, 2002 ( the Act ). Details are available from the Manager. A Fund of Funds Portfolio only invests in other collective investment schemes, which levy their own charges, which could result in a higher fee structure for these portfolios. A Feeder Fund Portfolio only invests in the participatory interests of a single Portfolio of a collective investment scheme apart from assets in liquid form. The Manager reserves the right to close certain Portfolios from time to time in order to manage them more efficiently. More details are available from the Manager. Forward pricing is used. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. The Manager undertakes to repurchase participatory interests at the price calculated according to the requirements of the Collective Investment Schemes Control Act, 2002, and on the terms and conditions of the relevant Deeds. Payment will be made within 14 days of receipt of a valid repurchase form. Any capital gain realized on the disposal of a participatory interest in a collective investment scheme is subject to Capital Gains Tax (CGT). ETFs are valued on a daily basis at 17h00. Liberty is a member of the Association of Savings and Investment of South Africa. The Manager is a member of the Liberty group of companies. Telephone 011 291 8042. Contact details of Trustees(ETF) Societe Generale, 2nd Floor, 160 Jan Smuts Avenue, Rosebank, 2196 T + 27 11 448 8400. STANLIB Collective Investments (RF) Limited (Reg. No. 1969/003468/07) 17 Melrose Boulevard Melrose Arch 2196 PO Box 203 Melrose Arch 2076 T +27 (0)11 448 6000 T 0860 123 003 (SA only) Broker 0860 104 418 (SA only) Unit Trust UTbrokersupport@stanlib.com LISP lispbrokersupport@stanlib.com GPS coordinates S 26.1347, E 28.0686 W www.stanlib.com/indexinvestments