Weekend Argus (Saturday Edition) - - FRONT PAGE -

Tra­di­tion­ally, col­lec­tive in­vest­ment schemes (unit trust funds and ex­change traded funds) have used the to­tal ex­pense ra­tio (TER) to re­flect costs, while life as­sur­ance com­pa­nies have used the re­duc­tion in yield (RiY) on their in­vest­ment prod­ucts. Both are ex­pressed as a per­cent­age, per year, of your to­tal in­vest­ment value.

• TER: re­flects an­nual as­set man­age­ment fees, in­clud­ing any per­for­mance fees, as a per­cent­age of your in­vest­ment.

• RiY: shows the ef­fect of costs as an ero­sion of value, or a re­duc­tion in the an­nual yield or re­turn over a fixed term.

Nei­ther mea­sure fully dis­closes all the po­ten­tial costs, and the RiY uses as­sump­tions that could prove to be in­cor­rect.

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