Invest in FTSE JSE Swix from as little as R150

Look at lower-cost platforms out there

A 60-year old Sowetan reader from Newcastle, KZN, who’s keen to invest in the FTSE JSE Swix has written to Money to find out more about it and how she can invest in the index-tracker. Money unpacks. Investing in the FTSE JSE Swix or Shareholder Weighted Index means investing in a fund that tracks this index. The index is made up of all the shares on the JSE.

The Swix differs from the regular FTSE JSE All Share index in that it weights shares in the index in line with the amounts listed on a company’s shareholder register in South Africa, and excludes amounts held by shareholders on foreign exchanges.

This means companies that list their shares in SA and a foreign exchange will have lower weights in the Swix. There is only one fund that tracks the Swix itself and three that track the Capped Swix, where maximum weighting of a share is 10% of the fund.

The one fund that tracks the FTSE JSE Swix Index is the Sygnia Swix Index Fund. You can invest in this directly on the Sygnia website if you have a lump sum of R20,000 to invest or can invest R500 a month. Old Mutual offers the Capped Swix Index also for a R20,000 lump sum or R500 a month and you can invest online. Momentum also offers a Capped Swix Index Fund for a R2,000 lump sum or R250 a month. You can invest online. The Satrix Capped Swix ALSI Fund is available on the Satrix Now platform and there are no minimum investment amounts.

Unit trusts only have one investment management fee and the fund may incur some trading costs – these are paid in the fund and reported jointly as the total investment cost. Fortunately, there are some lower-cost investment platforms that offer access to exchanged traded funds (ETFs) and charge you a platform fee and lower brokerage fees. These can also accommodate much lower minimum amounts in a cost-effective way. Remember there is also a difference between the price at which you buy an ETF and that at which you can sell it. This is known as the buy-sell or bid-offer spread.

The fou r ETFs are from Absa, Satrix, Stanlib and Sygnia, and the unit trust is available from Satrix.

The four ETFs can be purchased on lower-cost investment platforms like etfSA and Easy Equities. etfSA offers all four ETFs on its Investor Plan in which you can invest as little as a R1,000 lump sum or R150 a month on an ongoing debit order. The Satrix, Stanlib and Sygnia Swix Top 40 ETFs are available on the Easy Equities platform which accepts investment amounts of any size. You can also invest in the Sygnia ETF on the Sygnia website if you have R1,000 to invest as a lump sum or R500 ongoing.

You can also invest in the Satrix Swix40 ETF and the Satrix Swix40 unit trust on the Satrix Now platform which also has no minimum investment amounts.

You can invest online. You can also buy the ETFs using an online brokerage account like those offered by the banks. Standard Online Share Trading, for example, offers access to all four of the ETFs on its Auto Share Invest platform.

You can buy online through the bank’s internet banking or mobile app if you have at least R250 to invest.

In addition, if you plan to invest for the long term and not to trade frequently, you will incur an inactivity fee on the Standard Bank platform.

If you invest in January and do nothing else for the rest of the year, you pay a R125 fee for the year, but if you invest at least every two months, you won’t pay this fee.

When you buy popular ETFs and unit trusts, most of the financial institutions also let you hold your investment in a tax-free savings account. This means you can – if you haven’t yet exhausted these annual limit – hold the investment without paying dividend tax and without incurring capital gains tax when you sell.

‘ ‘ You can hold investment in a tax-free savings account