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Finweek English Edition - - INVESTMENT -

Craig Gra­didge CFP ® (@gra­didgec) is an in­vest­ment and re­tire­ment plan­ning spe­cial­ist at Gra­didge-Mahura In­vest­ment. that mat­ters most to long-term in­vestors – div­i­dends.

The graph be­low shows the div­i­dends that each fund would have de­liv­ered from a R1m in­vest­ment made when the SDP fund was launched. On this score the PDM has un­der­per­formed quite sig­nif­i­cantly rel­a­tive to the other two funds. It is also the most ex­pen­sive of the three and this cost has eaten into div­i­dends quite ma­te­ri­ally. The SDP is by far the cheap­est of the three funds with an an­nual TER (to­tal ex­pense ra­tio) of only 0.51%.

The SDP tracks the JSE/FTSE Div­i­dend Plus In­dex, which rep­re­sents the 30 high div­i­dend-yield­ing com­pa­nies within the uni­verse of the FTSE/JSE Top 40 and FTSE/JSE Mid Cap In­dex (ex­clud­ing real es­tate) that are ex­pected to pay the best nor­mal div­i­dends over the forth­com­ing year. The fund is re­bal­anced quar­terly and there­fore in­curs min­i­mal trad­ing fees.

While the SDP scores highly on both cap­i­tal growth and div­i­dends, this does not im­ply that it is bet­ter than the other two funds. How­ever, the low cost struc­ture does show its value over time as in­vestors get more of the div­i­dend.

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