SATRIX INVESTMENT PLAN
Client Letter – August 2008
INVESTMENT PLAN FEES
In the last Client Letter (May 2008), we advised that Satrix Managers has been in negotiation with Automated Outsourcing Services (Pty) Ltd (AOS), which administers the Satrix Investment Plan through an outsource agreement with Satrix, to reduce the annual management fees paid by clients in the Investment Plan.
We are now happy to announce that, with effect from 1st September 2008, there will be a meaningful reduction in fees.
The new fee schedule will introduce a tiered structure, depending on the sum invested per fund (note: not per investor or per account), but on the basis of the amount invested in each Satrix product. The new annual management fees are as follows:
ANNUAL MANAGEMENT FEE |
||
Total Investment Per Fund |
New Fee |
Old Fee |
R0 to R100 000 |
0,80% |
1,00% |
R100 000 to R250 000 |
0,75% |
1,00% |
R250 000 to R1 000 000 |
0,70% |
1,00% |
R1 000 000 to R3 000 000 |
0,50% |
1,00% |
R3 000 000 or more |
0,45% |
1,00% |
On a weighted value basis, the average fee falls from 1,0% to 0,7%. AOS have undertaken to look at further fee reductions as the total amounts inversed in the Satrix Investment Plan increase in value. From 1st September 2008, all clients accounts will be automatically switched to the lower annual management fee structure.
SATRIX INVESTMENT PLAN FEE VERSUS COMPETITIVE PRODUCTS
Certain investors have queried the relative competitiveness of purchasing Satrix securities through the Investment Plan platform compared with other platforms, such as linked service providers (LISPS), who offer investors similar collective investment schemes based products.
The table overleaf is indicative of fee structures in South Africa. Of course, the fees charged vary depending on the actual product in which the investment takes place (some unit trusts have higher costs and fees than others). Where Satrix is particularly competitive is in the lower total expense ratios (TERs) charged relative to other collective investment schemes; no annual fund management fees are payable by AOS (for Investment Plan users) to Satrix; and no performance fees are levied by Satrix.
NEW PRODUCTS
As reported in the last Client Newsletter, we are currently developing the Satrix RAFI 40 index and this should be launched in the third quarter of this year.
TOTAL FEE STRUCTURES |
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Platform Fees |
Initial Fees and Transaction Costs |
Total Expense Ratios (TERs) |
Annual Fund Management Fees |
Performance Fees |
Advisor Fees |
|
| Satrix Investment Plan | 0,45% to 0,8% (new fee schedule) |
0.1% (plus VAT) (brokerage) |
0,35% to 0,45% |
Nil |
Nil |
Upfront: 0% to 3,42% Ongoing: 0% to 1,14% |
| Platform A | 0% to 0,5% (rebates may apply) |
0% to 0,25% (plus VAT) |
1,25% to 4,50% |
0,57% to 3,99% |
0,25% to 0,75% |
Upfront: 0% to 3,42% Ongoing: 0% to 1,14% |
| Platform B | 0,35% to 0,85% |
0,15% to 0,25% (plus VAT) |
1,25% to 3,95% |
0,75% to 2,7% |
Not disclosed |
Upfront: 0% to 4,56 Ongoing: 0% to 1,71% |
Notes:
| 1. | Platform fees | Are charged by the Administrator who provides administration and trading platforms for unit trust or Exchange Traded Fund products. AOS is the platform for the Satrix Investment Plan as shown in the above table. |
| 2. | Total Expense Ratio (TERs) | Measure the actual cost of operating the structure and management of the collective investment scheme. However, TERs exclude distribution charges and brokerage costs, as these could vary from investor to investor. TERs are absorbed in the price of the units and are not paid by the investor directly. Satrix products have TERs significantly lower than other collective investment schemes. |
| 3. | Annual fund management fees | Are paid by the investor, through the administrator to the unit trust manager. Satrix does not charge any annual management fees for the Satrix Investment Plan. |
| 4. | Performance fees | Some unit trust managers levy performance fees to the extent that they outperform the benchmark indices. Satrix does not levy any performance fees. |
| 5. | Advisor fees | Where clients utilise a registered financial advisor, the advisor is paid from the client's funds, similar commissions to those levied by other platforms. |
Mike Brown
Satrix Managers (Pty) Ltd
Tel: 011-784–0641 Fax: 086 508 7170
Email: mikeb@satrix.co.za or info@satrix.co.za
Call Centre contact: 086 1100 670
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