Introduction

In March 2003, legislation in South Africa was changed, adapting to the growth and diversification of the financial services industry. The old Unit Trusts Control Act of 1981 was replaced by the Collective Investments Schemes Control Act No. 45 of 2002. One of the many changes included the renaming of unit trusts to collective investments and units to participatory interests.

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Benefits of investing in Collective Investments

Easy and affordable investment

Collective investments are a very convenient and low-cost way of investing in markets which you otherwise would have found difficult to access. You can also share in the rewards of the JSE Securities Exchange SA and other markets without running the risks of direct investment. Investors can switch portfolios as and when their needs and risk profiles change and they can increase, stop or decrease debit orders without penalties.

Diversification of risk

With a relatively small investment, a collective investment provides access to a broad spread of different shares and sometimes asset classes, thereby reducing risk.

Professional management

Experts experienced in the investment arena are managing your money on a daily basis and ensuring your piece of mind.

Accessibility

Collective investments are liquid and easily accessible. You can sell all, or part, of your investment at any time. However, we recommend that an investment in collective investments should be viewed over a medium- to long-term of 3 — 5 years or longer.

Flexible investment options

Lump sum investments can be made at any time during the life of the investment. Once your account has been opened, you are able to invest any additional amounts to top up your investment balance.

Debit order investments A regular monthly investment into your investment account has the benefit of rand cost averaging where additional participatory interests can be gained during times of market weakness. A debit order investment also allows you the opportunity to invest in a long term savings plan for the financial goals you have in mind.

Switching With the wide range of portfolios on offer, switching between different portfolios can be done at little or no cost.

Cash flow plan The cash flow plan choice has two different options. The first option allows you to phase money into one of the equity portfolios over a set period, again providing rand cost averaging to the investment. The second option provides for regular withdrawals from your investment account which could be used to add to your existing income level.

Safety and transparency

The collective investment industry is strictly regulated by the Financial Services Board (FSB), the Association of Collective Investments and each collective investment scheme manager’s trustee/custodian. You enjoy total transparency of fees, charges and investment performance.

Tips for successful investing

There are various aspects you should consider before making your investment. These include identifying your goal, establishing a time frame and setting realistic goals and lastly identifying your level of risk according to your current responsibilities.

Understand the volatility of return associated with different investment types.