Free Your Investments From High Costs – Go Global
OWN THE WORLD WITH ONE SIMPLE INVESTMENT
By now investors know the story well. Invest offshore, because South Africa represents less than 1% of the world’s economy.
Now that we know the why, Itransact examines the what, where and how.
WHAT?
It’s quite simple. Warren Buffett suggested that by investing in low-cost index tracking funds, the ‘know-nothing’ investors mostly outperform the ‘know everything’ fund managers.
A mere R100 invested ten years ago in the general equity sector would have provided the following total returns:
Equity General
| Sector | Monetary Return |
| MSCI World Equity Index* | R 520 |
| SA Mt Global Equity General** | R 390 |
WHERE?
It stands to reason that one should not only invest in global equities, but diversify across as many countries, regions and additional asset classes such as real estate and fixed income to achieve a balanced exposure to world markets. Using the same argument as above, one can conclude that investors would have been far better off had they invested in index tracking funds.
Real Estate
| Sector | Monetary Return |
| MSCI World/Real Estate Index * | R 139 |
| SA Mt Global Real Estate General ** | R 125 |
Fixed income/interest bearing
| Sector | Monetary Return |
| FTSE World Interest Bearing Index * | R 283 |
| SA Mt Global Interest Bearing ** | R 221 |
HOW?
The easiest way to go global is to invest once off or monthly in Itransact’s range of low-cost index tracking portfolios comprising the most efficient blend of international Exchange Traded Funds (ETFs) that track equity, real estate and fixed income asset classes. Owning such a portfolio exposes your Rand’s to the performance of over 2500 of the worlds best performing companies with one single investment. Alternatively, you may choose to invest hard currency in Itransact’s diverse range of capital protected growth products issued by international banks rated AAA and above.
CONCLUSION
Low-cost multi asset index tracking portfolios may also be linked to most investment products such as regular savings, RAs, preservation funds and living annuities all available at Itransact.
MULTI ASSET Index Tracker Fund Portfolio Returns
(As at 31 December 2019)
| DISCRETIONARY PORTFOLIOS | 1 YEAR | 2 YEAR | 3 YEAR | 4 YEAR | 5 YEAR | 6 YEAR | 7 YEAR | 8 YEAR |
| Conservative | 7,79 | 6,32 | 6,45 | 6,09 | 6,04 | – | – | – |
| Cautious | 11,62 | 5,88 | 5,81 | 5,59 | 5,93 | 6,52 | 5,78 | 7,01 |
| Moderate | 15,04 | 6,62 | 7,20 | 6,75 | 7,39 | 8,15 | 7,81 | 9,02 |
| Growth | 15,87 | 3,86 | 7,27 | 5,37 | 7,34 | 7,10 | 7,83 | 9,03 |
| International | 25,71 | 13,96 | 13,56 | 11,50 | 11,52 | 11,58 | – | – |
| PRUDENTIAL PORTFOLIOS | 1 YEAR | 2 YEAR | 3 YEAR | 4 YEAR | 5 YEAR | 6 YEAR | 7 YEAR | 8 YEAR |
| Conservative | 10,18 | 4,49 | 4,16 | 4,64 | 6,32 | – | – | – |
| Cautious | 9,77 | 3,49 | 4,16 | 4,64 | 5,64 | 6,11 | – | – |
| Moderate | 11,29 | 2,54 | 4,37 | 4,10 | 5,84 | 6,82 | – | – |
| Growth | 11,63 | 1,41 | 5,29 | 4,91 | 6,24 | 7,15 | – | – |
Performance is annualised and net of the underlying index-tracker fund fees, portfolio manager’s total fees and expenses, trading costs and VAT.
* MSCI and FTSE are indices used to measure the performance of a sector. Itransact offers unit trust funds that track these indices for your convenience
** Measure of the average performance of all SA unit trust managers within a sector
All examples in ZAR. Data provided by Profile Data, Fund Analytics, Index Solutions, February 2020