Mirror, mirror on the wall, who’s the cheapest of them all?
On the thinkdirect platform we try to do a one thing in a simple way. We also try to make long-term retirement investing a little less daunting – it’s not easy to plan 20, 30 or 40 years in the future after all. Now, investment fees are important, and so is how your money is invested. Which is why thinkdirect only shows low-cost index funds. What’s an index fund? Check this out!
Currently we have 3 Providers on our platform: Old Mutual, Sygnia and Prescient. Those are not the only index funds on the market, and, with our eye on making all things equal, we will be looking at as many of them as possible during this series.
Part 1, the one you’re reading now, will look at the 3 on our platform, plus an established industry name: 10X Investments. As we grow we hope to add more and more providers to our platform, giving you, the consumer, all the options you could possibly want in one place.
However, until that happens we will do our best to showcase all low-cost index funds, regardless of whether or not we currently work with them.
Let’s get started! (in no particular order)
Old Mutual – Core Diversified Fund
This fund from Old Mutual has been around a few years, with the 1-year results beating the benchmark quite comfortably. Their fee structure is pretty straight forward, with your total fee dropping as you reach a higher investment amount. From Rand 1, your total investment fee will be 0.93%, including VAT and trading costs.
Sygnia – Skeleton Balanced 70 Fund
Launched in 2013, the Sygnia Skeleton Balanced 70 fund has been a trendsetter in the index investment space. Their total investment fees are easily the lowest on the market, with a Rand 1 investment of 0.63%, including VAT and trading costs. You can invest for as little as R500 a month, with the total fund sitting around R568million to date.
10X Investments – High Equity Fund
One of the more established index tracking funds on the market, the 10X High Equity Fund will soon have a 10-year track record to boast about. Their fees, while not the lowest, do have a built in sliding scale. This sliding scale ensures your fees drop as your investment total does. From Rand 1, you will pay an annual investment fee of 1.17%, including VAT and trading costs. According to their sliding scale, you will need around R5million (R5.6M for the Retirement Annuity, R5.3M Preservation Fund, and R5.1M for the Living Annuity)* to ensure your fee drops below a total of 1% per year.
Prescient – Balanced Fund
Award-winning asset managers Prescient’s Balanced Fund is a well-established index fund that has a proven 3-year track record. They are well known for their income protection funds, and have an investment philosophy that keeps the client’s best interests first. Their fee structure is simple, charging a flat total investment fee of 1.22%, including VAT and trading cost.
*Calculations done according to 10X Investments’ sliding scale for each product, with a Trading Cost of 0.14%. This is the fee payable in year 1 if your total assets are below the amounts mentioned. Your total investment fees will drop each year as your total assets grow, eventually paying less than 1% in total investment fees.