WRAP­PER FUNDS

Finweek English Edition - - FEEDBACK - 69 Kingsway Av­enue, Auck­land Park, Johannesburg 2092, tel (011) 713-9601 or ed­i­to­rial@fin­week.co.za Read­ers’ views are edited and pub­lished at the dis­cre­tion of GAGU MAT­SE­BULA SI­MON BROWN

WRITES VIA EMAIL: I have been do­ing a bit of re­search into off­shore ex­change-traded funds (ETFs), and a cou­ple of Vanguard prod­ucts have caught my eye.

My co­nun­drum now is how to ac­tu­ally pur­chase them, and I hap­pened to stum­ble upon the con­cept of off­shore wrap­pers. Are there any par­tic­u­lar rep­utable com­pa­nies one can ap­proach? What should the fees rea­son­ably be? Do they fare bet­ter when com­pared with off­shore bro­ker­age ac­counts?

RE­SPONDS: Most of the lo­cal long-term in­sur­ers and in­vest­ment houses of­fer off­shore wrap­per funds. Costs are very im­por­tant as one is adding an ex­tra layer of fees on top of the prod­uct and plat­form fees (and maybe even ad­viser fees). Ideally I would sug­gest the wrap­per should charge less than 1% of the value be­ing in­vested ev­ery year, lower of course is bet­ter.

You can also go the lo­cal route via the db X-track­ers ETFs (from Deutsche Bank). The DBXUS that tracks the MSCI 600 (es­sen­tially the same as the S&P 500 in­dex) trades on the JSE or via any of the plat­forms that of­fer ETFs. It is fully off­shore in that your rands are con­verted to US dol­lars be­fore buy­ing the in­dex, so you get ex­po­sure to both the US stocks and the cur­rency.

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