Don’t switch just yet

Finweek English Edition - - Market Place -

With Syg­nia buy­ing the five ex­change-traded funds (ETFs) from Deutsche Bank and a few newly listed com­pet­ing prod­ucts com­ing to mar­ket re­cently, many are ask­ing if they should be switch­ing to an­other prod­uct.

The rea­sons put for­ward for the switch is be­cause the soonto-be-re­branded Itrix is more ex­pen­sive than the com­pe­ti­tion.

This is in­deed the case and when I asked Syg­nia CEO Magda Wierzy­cka if they’d be drop­ping the to­tal ex­pense ra­tios (TERs), the an­swer was no. She did con­cede they’d re­view them from time to time. Truth­fully, I had hoped they would drop the fees as th­ese ETFs are rel­a­tively ex­pen­sive. Wierzy­cka com­mented that the new com­pet­ing prod­ucts have tar­geted TERs and have not been op­er­a­tional for a year, so they may not meet the tar­get. That’s a fair point, but I sus­pect any pos­si­ble miss on the tar­get TERs would be mod­est.

An­other point for not switch­ing just yet is that there are costs in­volved, and the sav­ings are at best a third of a per­cent. So for now I am wait­ing to see how it all shakes out on the fee front. The new ETFs may not end up as cheap and Syg­nia may still drop its fees. ■

Magda Wierzy­cka CEO of Syg­nia

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