From our readers
JOHAN NEL WRITES VIA EMAIL: I’d like to get comments from you about my portfolio. It consists of ordinary shares, approximately equally divided in terms of value. It consists of the following shares: BHP Billiton, Steinhoff, Sasol, Bidvest, Richemont, FirstRand, Reinet, EOH, Naspers, PSG, Remgro, Woolworths, Pallinghurst, and cash – 5% of portfolio value.
At the moment the market is moving from one record to the next, our economy does not show robust growth, which makes me feel uneasy. I regularly see advertisements and articles on exchangetraded funds (ETFs), but I know little about them.
Must one evaluate ETFs in the same way as local shares to invest in them? Do you have gearing when you invest in them? With shares you have to pay 100% of the purchase price. Is it the same for ETFs?
SIMON BROWN RESPONDS: ETFs are indeed ungeared. In other words, one pays the full price. They are different to share selection as they track entire indices so rather than a view on a particular share, they offer a view of an entire index, commodity or geography.
As for more information, we have run a few articles in Finweek if you have back issues lying around. If you can’t, the different ETF issuers, etfSA (www.etfsa. co.za) and my own website JustOneLap (www.justonelap.com) all offer advice on them. The last point regarding ETFs is that the Deutsche Bank ETFs are by far the easiest way to get international exposure.
As for your portfolio, it looks great. It’s diverse across sectors with a good measure of international exposure and largely the winning stocks in each sector – something that I always advocate. Pallinghurst is the only one that jumps out at me, but every portfolio needs a spice and Pallinghurst is yours.