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 Board (FSB) 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 FSB 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, 33.3% of the gain must be added to the tax payer's income. The current CGT annual exemption is R30,000.

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 may make adhoc 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:

  • Annual Investment management fee This fee is charged by the manager of the investment for the research and decision-making they do. The fees are accrued daily and are included in the unit price of the investment. They are therefore not shown as specific deductions on your statement. The best way to compare ongoing underlying fees is to refer to an industry measure called the Total Expense Ratio (TER).
  • Beanstalk fee This fee covers all the value add you have gained from using the Beanstalk website and includes the fund screening, analysis and recommendations; the back office support as well as the access to a CFP Qualified Financial Planner; ongoing advice, support, newsletters, fund and industry information.  The fee is deducted by means of unit reduction by Allan Gray and paid across to Beanstalk.

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