Unit Trusts

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What is a unit trust?

A unit trust gives easy, cost-effective access to assets such as shares, listed property and bonds, which are not usually available to direct investors with relatively smaller amounts to invest. The fund manager is responsible for diversifying your investment to protect it from being too exposed to a potential fall of a single asset.

Choosing the right product

Standard vs Tax-free unit trusts

A tax-free unit trust works largely the same as a standard unit trust, except that you don’t pay any tax on your interest or dividends earned, and capital gains are tax-free too. This means you don’t pay tax on the growth of your investment, which makes it far more effective way to reach your goals.

Tax-free unit trusts

By law you can save R36 000 every year or R500 000 over a lifetime in a tax-free vehicle such as a unit trust.
All interest, capital gains and dividends you earn will be completely tax-free (only applicable to SA tax residents).
You should not invest more than the maximum of R36 000 per tax year and R500 000 over your lifetime across all your tax-free products combined. If you do, you will pay a tax penalty of 40% of any amount over this limit.

Standard unit trusts

No maximum limits on how much you can invest – only minimum investment amounts, which vary from fund to fund.
Ideal option once you've exhausted the maximum investment amount limits of your tax-free unit trust. Your income and capital gains are taxable.
Ideal if you invest in money market/interest yielding products only, and you’re not earning more than R23 800 (or R34 500 if you’re older than 65) of income in interest across all these products (in other words, you’re not paying any tax on your investments in any case) since you are below taxable limits.

Risk Scale

Choose a unit trust that suits your needs

When selecting a unit trust, you need to first consider your personal goals and determine where you are positioned on the risk scale. Ranging from conservative to aggressive, the risk scale outlines the different investor personalities to help you determine which fund is most suitable for you.

Invest Offshore

Diversify your portfolio with offshore investments.

With a presence in over 22 countries, Sanlam gives you access to a range of offshore investment solutions – across continents and asset classes. Investing in global markets enables you to diversify your investment portfolio, and:

Spread your portfolio over multiple markets to lower overall risk
See higher potential returns from a wider range of opportunities
Protect your investment against a depreciation in the rand and other country-specific risks
Enjoy smoother potential returns, when investing in different regions at different stages of their growth and economic cycles
Gain access to industries that are not locally available

We take great pride in offering prices that are competitive internationally, along with low-cost structures that are designed to maximise your returns. You also have the option of investing either in rands or directly offshore, using your offshore investment allowance. Please note: Standard unit trusts offer both rand and foreign denominated investment options, whereas tax-free unit trusts are restricted to rand denominated investments only.

Effective Annual Cost (EAC)

What is Effective Annual Cost (EAC)?
Effective Annual Cost (EAC) is a measurement aimed at standardising cost disclosures across different investment products. EAC is expressed as a percentage of the investment amount. It provides a summary measure of cost across four components, namely investment management charges, advice charges, administration and other charges. The aim is to help investors make better informed decisions about the costs they are likely to incur when investing and the impact these charges could have on investment returns. However, it does not measure the features of a product.
Why was EAC introduced?
The measure was introduced by the Association for Savings and Investments South Africa (ASISA) to help align the investments industry more fully with the principles of Treating Customers Fairly (TCF). ASISA provides clear guidelines on how EAC should be calculated and disclosed for investment products. EAC is aimed at helping clients compare costs across different investment products.
How is EAC introduced?
EAC is a summary measure derived from four components: investment management charges, advice charges, administration and other charges. ASISA prescribes how costs are classified as well as the calculation periods. The disclosure periods are one year, three years, five years and 10 years for unit trust investments. In terms of the prescribed calculation methodology, it is assumed that the client disinvests fully at the end of each of these periods. The ASISA standard on Effective Annual Cost is available on the ASISA website at www.asisa.org.za.
Can I obtain the EAC for any investment?
We provide you with the Effective Annual Cost (EAC), which is the industry standard for investments. We will provide EAC information annually for new investments and whenever an investment transaction occurs that impacts the cost of your investment. Investment transactions that impact your cost include additional investments, increases in debit orders, and changes to a fee arrangement with your adviser.

Forms

PLEASE NOTE: We encourage you to use our Smart Invest online investing platform. We recommend speaking to a financial adviser before making any investment decisions.