Investing with CoreShares

CoreShares funds are available on a variety of platforms. Please find all the details on our Invest page.

We run segregated mandates for institutional investors and can facilitate unit trust investments for advisors that meet the minimum size threshold. CoreShares ETFs and Unit Trusts are available on a variety of platforms. Please find all the details on our Invest page.

This depends on the platform used. ETFs do not have a minimum investment amount and an investor can, in theory, buy only one single share if so desired. However, some stockbroking platforms may have size limits. It’s best to speak to your broker or investment platform directly.

All our funds are detailed here where you can find fund fact sheets, full holdings information if you scroll down and educational resources. All our latest performance metrics are available here.

ETFs and Unit Trusts are both CISCA portfolios and are therefore regulated by the FSCA. ETFs are listed on the JSE and are therefore also regulated by the JSE. ETFs and Unit Trusts may seem similar in nature as they both hold a basket of shares, but there are several differences between the two.

Operational Considerations

ETFs are listed on the JSE, therefore they are easy to access if you have an account with a traditional stockbroker or an online share trading account. The access is unrestricted, i.e. anyone who can access JSE-listed shares can access any ETF that is listed there.

Unit Trusts are most commonly accessed via a LISP (Linked Investment Service Provider) or from the fund manager directly. Most LISPs restrict the number of funds made available, therefore you may need to shop around to find the exact fund you have in mind, or else request that it be added to your LISP of choice.

Trading

ETFs are traded on the JSE throughout the day. This means you can give your stockbroker an instruction to buy or sell at any time during market hours.

Unit trusts price once a day, which means a trade confirmation can be expected the next trading day and depends on cut-off times.

Transparency and Fees

ETF holdings are published daily, while Unit Trusts are only obliged to disclose their holdings quarterly (although in the case of passive funds, the index components will be publicly available).

Trading costs are explicit when buying and selling ETFs (i.e. the investor pays commission), whereas when buying and selling unit trusts, you don’t receive this type of fee breakdown.

The fund manager must display management fees and TERs for both types of funds. In addition, you should check what fees your broker, LISP and / or financial advisor charges over and above the fund management fees to know the total cost to you, the investor.

Fees and minimums sizes may differ.

Which is best for me? 

Most of our investors choose between an ETF and a Unit Trust based on their individual operating environment. If you have a financial advisor who invests in funds on your behalf, you are most likely already set up to invest in Unit Trusts, so this will be the most convenient option going forward. If you have an online share trading account or a traditional stockbroker, an ETF will be very simple and easy for you because they trade and settle just like shares. Please note that, at this stage, not all our funds are available in both ETF and Unit Trust format.

The CoreShares Wealth Accumulation Fund is a high equity, multi-asset solution, while the CoreShares Stable Income Fund is a low equity multi-asset solution.

Typically, investors with longer time horizons can tolerate higher volatility over the short- and medium-term, and therefore would benefit from a higher allocation to growth assets (namely, equity and property) to improve their long-term investment outcomes.

As such, the Wealth Accumulation Fund is primarily aimed at investors with at least 5 years left to retirement, while the Stable Income Fund is positioned for someone transitioning into retirement, or already in retirement, and living off their investments.

A medium equity solution can be created by investing 50% of your assets into the CoreShares Wealth Accumulation Fund and 50% into the CoreShares Stable Income Fund.

Individual circumstances and risk tolerance should always be taken into consideration and a financial advisor is best placed to offer guidance in this regard.

An introduction to both these multi-asset solutions is available here.

All investments carry risks, but it’s important to understand exactly which risks you are facing so that you can manage your expectations accordingly.

Market Risk / Capital at Risk

All our ETFs and Unit Trusts give investors exposure to the market in one form or another (e.g. South African equities, offshore equities, property or even a combination of these). This means that your investment will go up and down in value when the market does. This is called market risk. To participate in the upside (i.e. see your investment worth more when the markets go up) also comes with some risk, namely, your investment will lose value during periods when markets sell off (or come down). In summary, the value of the income from your investment and the investment itself will fluctuate, and the initial investment amount is not guaranteed.

Exchange Rate Risk

Included in our fund range are some ETFs and Unit Trusts which provide exposure to offshore markets (e.g. equity and property) in local Rand terms. In these investments, your performance in Rand terms will be made up of the performance of the underlying assets as well as any changes in the exchange rate. For example, an investor in the CoreShares S&P500 ETF might read that the US equity market has rallied 5%, but at the same time the Rand has strengthened against the US Dollar by 1.5% over the period. This means that, in Rand terms, the investment in the CoreShares S&P500 ETF would have increased 3.5% (5%-1.5%). On the other hand, if the Rand weakens, your offshore performance is boosted by the exchange rate move.

Fees

We show management fees and TERs (Total Expense Ratios) for all our funds on the respective fund pages or you can download our full fund range document for a summary.

In addition, you should check what fees your broker, LISP and / or financial advisor charges over and above the fund management fees to know the total cost to you, the investor.

The reason we disclose these fees separately is to provide a clearer picture to investors of the ongoing costs they should expect.

The management fee is what the fund manager charges for their services as an asset manager.

Then we add in all the other ‘running costs’ paid to third parties, e.g. taxes (STT and VAT), fund bank charges, fund audit fees, custody fees and trustee fees to arrive at the TER (Total Expense Ratio).

Then we add TCs (transaction costs), otherwise known as what it costs an investor to buy, hold and sell this fund, to produce the TIC (Total Investment Charge). You can think of this final TIC figure as a total cost of ownership figure.

It is important to understand the differences between these charges when comparing similar funds so you can make sure that you are comparing one management fee to another (and not one’s management fee vs another’s TER, for example, which would not be a fair comparison).

CoreShares does not restrict withdrawals or penalise investors for making withdrawals from our funds. All our ETFs and unit trusts are “open-ended funds” which means that investors can invest or redeem (a.k.a. buy or sell) on any normal business day. It is always best to check the fees charged by your financial advisor, stockbroker or investment platform in this regard as well, to have a clear overview of the total fees you might expect when you disinvest.

Performance

All our latest performance metrics, including yields, are available here. In addition, the updated yield of each fund can be found on the respective fund page on the individual fact sheets here.

You can sign up to receive our monthly newsletter, the Core Scores, if you would like to receive the month end performance figures in your inbox as soon as they are released here.

Fund Structure

Yes, all our funds are physically replicated. It is worth nothing that for some of our offshore exposures we use a feeder fund structure, which means that for part or all of the index replication, we buy a foreign-listed ETF. We do this in cases where we have calculated it to be cheaper and more tax efficient than buying the individual index constituents directly, and this method therefore materially benefits our investors.

For example, the CoreShares S&P500 ETF uses this type of feeder fund structure as follows: We invest in the Irish-domiciled Vanguard S&P500 ETF (VUSD LN) which charges 7bps TER and is therefore highly efficient. Irish domiciled funds only suffer 15% withholding tax on dividends from US securities compared to losing 30% of the dividends if you’re domiciled in South Africa. This way, our investors save 15% of the dividends (the difference between 30% and 15%), by investing via an Irish-domiciled vehicle, instead of investing in the US securities directly. This saving more than offsets the small TER of 7bps we are paying that fund.

Yes. Our ETFs that offer exposure to South African underlyings pay out dividends quarterly (March, June, September and December), whereas the offshore ETF exposures distribute Semi-Annually (June and December).

ETFs are simple, transparent and easily accessible which makes them attractive investment tools for almost any investor. They also tend to have one fee class for everyone, which is why some financial writers refer to the rise of ETF investing as “the democratisation” of investing.

However, the very nature of ETFs being so easily accessible has also drawn criticism (particularly in the US where ETFs are widely used by retail investors). The onus is moved to the investor to determine whether the various investment strategies readily available in ETF format are appropriate in relation to their own risk tolerance and investment goals. As such, the onus is on the investor to make sure that they understand what they are buying.

Financial advisors can provide guidance relating to which investment strategies are appropriate for an individual investor. They take personal risk tolerance, investment goals, tax status and other individual circumstances into account before they can determine which investments are appropriate.

Yes. By law you’re allowed to invest in our range of CoreShares ETFs and Unit Trusts using your tax-free savings account, bringing you significant tax savings over time. Every year you can invest up to R36,000, or R500,000 over the course of your lifetime. Tax-free.

Maximise your returns and be free of taxes that are usually part of investing, such as:

  • Capital gains tax
  • Securities transfer tax
  • Dividend withholding tax
  • Interest tax
  • Income tax

You can make these investments monthly or as a once off.

Our multi-asset funds are both Reg 28 compliant, namely the CoreShares Stable Income and CoreShares Wealth Accumulation funds.

We do not currently have any ESG funds available, however we can offer efficient tracking of most available ESG indices via a segregated mandate, for a minimum investment size.

Investor Education

A passive strategy has a set of criteria defining the types of stocks it owns, and then invests in all the stocks that meet those criteria. There is no attempt to pick the “winners” out of that group.

Indexation is the most common form of passive investing. An index fund will state the benchmark index that is tracked, for example, the ALSI, the S&P SA Top 50 Index or the MSCI All-Countries World Index. The portfolio manager’s job is to simply invest in the stocks (or bonds) that are included in the benchmark index.

Passive funds are low cost. One way to think about it is that the portfolio manager does not make any active stock selections, therefore investors don’t have to pay a team of analysts for research and stock recommendations.

Apart from being cheaper, passive investing has also grown in popularity because it is less complex, more transparent (you know exactly which assets are in the fund) and often delivers superior performance to investors over medium to long timeframes.

Our documentary explains these concepts is greater detail: Chapter 2: Passive Investing. Watch now (6 minutes).

CoreShares follows an evidence-based investment philosophy. This means placing more focus on the facts and the science of investing and less focus on unanswerable questions such as trying to predict future market trends or events.

Some of the key aspects of this approach include:

  • Acknowledging that index funds tend to outperform the vast majority of actively managed funds
  • That asset allocation (and not alpha) drives the vast majority of client returns
  • A systematic, goals-based approach to investing that aims to minimise the moving parts when striving to meet an investment goal
  • Low-cost funds have a much better chance of out-performing high-cost funds
  • Diversification is key to lowering risk whilst retaining return expectations

Evidence-based investment

Our documentary explains this concept is greater detail. Watch now.

ETF Education

An Exchange Traded Fund (ETF) is a basket of securities (e.g. stocks or bonds) which tracks the performance of a benchmark index or stated strategy (e.g. S&P500). An ETF is bought or sold on a stock exchange (e.g. the JSE) just like a share. CoreShares offers a range of ETFs  listed on the JSE tracking a variety of indices in South Africa and offshore.

Benefits:

  • ETFs offer convenient access to a diversified basket of securities
  • ETFs are regulated by the FSCA as well as by the JSE.
  • ETFs are traded on the JSE throughout the day. This means you can give your stockbroker an instruction to buy or sell at any time during market hours.
  • ETFs are transparent and their holdings are published daily.
  • ETFs are cost-effective. ETF issuers charge a TER (total expense ratio) for managing the funds and the investors pay commission to their broker when buying or selling ETF shares.
  • If you have an online share trading account or a traditional stockbroker, an ETF will be very simple and easy for you to access, because they trade and settle just like shares.

No. ETFs are exempt from STT (Securities Transfer Tax).

A market maker is an exchange member that actively puts up bids and offer to ensure there is liquidity on the stock exchange in the ETF throughout the trading day.

The ETF Issuer is obliged to appoint a market maker to facilitate the entry and exit of investors from the ETFs.

Sanlam Private Wealth is our main market maker and we have others who create additional liquidity on the exchange. Please request SPW’s market making team’s contact details if needed: michellen@coreshares.co.za

The official closing NAV (Net Asset Value) of the ETF is the aggregate of all the underlying securities’ closing prices that make up the ETF. This is the official valuation of the ETF each day and is published by an external calculation agent. This is the figure that should be used to value your investment each day. The closing price of the ETF is simply the last trade of the day on the JSE in the ETF itself. It is seldom the same as the official closing NAV and should not be used to value your investment. You can find a more detailed explanation of these concepts here.