ZAR X to launch innovative unit trust platform soon

Moneyweb

A peculiarity of SA’s financial markets is that there are only about 370 listed companies, but close to 1 600 locally registered unit trusts. The investor choice in the unit trust market is therefore exponentially larger.

Yet, it’s currently far easier to trade shares than it is to buy or sell units in a unit trust. The adoption of technology by online brokers means individual investors can buy and sell a wide selection of shares at the click of their mouse. While it’s possible to do this on some unit trust portals offered by local asset managers, the selection of funds they offer is always limited.

Using blockchain technology, emerging stock exchange ZAR X plans to launch a platform that will allow the public to directly buy and sell a wide range of funds. “We saw the chance to add a layer of information and transparency for the investor, and give them ease of transactability,” says Etienne Nel, ZAR X CEO.

Compare and invest

The platform, which will be available on the ZAR X mobile app, will work similarly to online share trading. Investors will be able to view the characteristics of a range of unit trusts and buy and sell holdings at the touch of a button.

“We looked at the industry and realised that there was a need for a centralised point where someone could go and compare different funds.

“You can’t go a certain point and draw relevant details, choose between different managers, and then at that point actually transact.”

Information about all the unit trusts on the platform will be available on ZAR X’s website. This will allow investors to search by criteria such as the fund manager or fund category and find details such as fact sheets, fees and historical returns.

“All of that will be published live in real time, so it will make it really easy to compare funds,” Nel says. “You will be able to see all of that in one place, together with historical pricing and graphing facilities.”

‘Free to trade and free to hold’

Nel says it’s in negotiation with a diverse selection of asset managers to ensure there will be a good selection when it goes live. ZAR X will also run the platform purely on a pay-as-you-go principle. This could make it very attractive to buy-and-hold investors as they won’t have to pay ongoing platform charges.

“It will be free to get and free to hold,” Nel says. “So the app costs nothing to download, and there are no monthly charges. There is only a transaction fee when you trade.”

That will be set at 0.35% of the transaction amount, with no minimum charge. ZAR X plans to get the platform running before the end of this year.