Unit Trusts

What is a unit trust?

Unit Trusts, are governed by the Collective Investment Schemes Control Act (CISCA) and allow investors access to experts who have proven track records in managing money. A Unit Trust pools money of many investors and invests it in shares (equities), bonds, money market, property and other investments. They are cost efficient investment opportunities that cater for all types of investors, whether the investor requires a high risk equity (shares on the market) or low risk retirement income fund.

There are now over 1,000 different Unit Trusts in South Africa from which to choose, and making the right choice requires specialist knowledge. Don't worry though, Beanstalk has done the homework for you and simplified everything.

Warren Buffet: Image by www.insidermonkey.com
"Don’t invest in things (or in ways) that you do not easily understand."
Warren Buffett

Caricature courtesy of www.insidermonkey.com

How safe is my money?

As Unit Trusts are governed by the Collective Investment Schemes Control Act (CISCA) which is in turn governed by the Financial Services Conduct Authority (FSCA) with additional mandates of control imposed by The Association of Investments and Savings SA (ASISA), your money is pretty safe. All funds provided by Beanstalk are approved by the FSCA and adhere to the Act. These funds are governed by a Deed, and the underlying assets do not belong to the manager or management company; they are held in safe custody by the Allan Gray Nominees.

The selected manager of a fund is responsible for the management of the funds.

Beanstalk does not handle any of it's investors money. In fact, your money never touches our bank account. Your funds will go directly from your bank account via debit order, electronic collection or deposit, directly to the Allan Gray of Investec Bank Account and into the Allan Gray or Investec Investment Platform which will in turn pass the funds onto the fund you have selected on our website.  Allan Gray and / or Investec will be the administrators of your funds.

For security reasons, all withdrawals can only be paid into your bank account; no third party payments can be made.

What are the tax implications?

Capital Gains Tax (CGT): The gains from Unit Trusts are taxable in the hands of an investor when the units are sold. This can be as a result of redeeming or switching units. A capital gain or loss will be determined by calculating the difference between the original cost (base cost) and the market value of the units at the date of the sale. For an individual the capital gain is taxed at 18%. The current CGT annual exemption is R40,000.

Interest: Interest earned by the cash held within your Unit Trust needs to be declared on your tax return.

Beanstalk, via Allan Gray (as the administrators), will provide you with all the necessary Tax Certificates for you to include in your tax return.

How much can I invest?

Investors can invest either monthly and/or in a lump sum. The minimum investment is R500 per month and/or a R 20,000 lump sum. Thereafter you can make ad hoc contributions of a minimum of R5,000.

What access do I have to my money?

The current market value of your Unit Trust is payable in part or as a whole at any time without any penalties.

NOTE a Retirement Annuity Investment has certain restrictions in this regard; follow this link to find out about the accessibility of a Retirement Annuity.

What fees are payable?

There are no upfront fees!

Annual Fees are payable and these include an Investment Management Fee (which is charged by the investment funds in which you invest and varies from fund to fund), an Administration Fee (which is charged by Allan Gray for managing your money), and finally a Beanstalk Fee (which is a low 0.50% + VAT (if applicable) per annum and includes fund screening, analysis and recommendations; back office support; as well as access to a CFP Qualified Financial Planner; ongoing advice, support, newsletters and fund and industry information). All fees are deducted by means of a unit reduction by Allan Gray and paid across to the applicable service provider.

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