Exchange traded funds, commonly referred to as ETFs, are regulated, open-ended investment funds that trade on stock exchanges just like any other listed, tradable security. They combine the liquidity elements of stocks with the diversification offered by an index fund. Efficient, transparent and flexible, ETFs are the fastest growing category of investment in the world today.
Sygnia Itrix ETFs are portfolios of the Sygnia Itrix Collective Investment Scheme registered under the Collective Investment Schemes Control Act 45 of 2002.
The investment objective of each portfolio is to replicate the price and yield performance of the relevant indices which they track and hence offer investors access to international investments through a regulated structure, in an easy and cost effective manner.
An underlying index refers to the index that a particular Sygnia Itrix ETFs is seeking to track. For example, the underlying index of the Sygnia Itrix MSCI USA Index ETF is the MSCI USA Index.
The tracking error is a measure of the efficiency with which an ETF achieves its investment objective, which is tracking the underlying index. The lower the tracking error, the closer the performance of the ETF is to that of the underlying index.
Whilst both unit trusts and ETFs are regulated and registered under the Collective Investment Scheme Control Act, ETFs trade on stock exchanges just like any other listed, tradable security. Unlike a unit trust, which can be bought or sold only at the end of the trading day, an ETF can be traded intraday, during exchange trading hours.
In order for an individual to track the performance of an index they would need to buy its constituent shares and then manage their portfolio. This would be both prohibitively expensive and time-consuming, not to mention the restrictions imposed by exchange control. Sygnia Itrix ETFs are a convenient and low cost way for the individual South African investor to achieve exposure to a broad range of equities in a given overseas market.
The key benefits of the Sygnia Itrix ETFs can be described in three words – Efficient, Transparent and Flexible.
Low Fees – Sygnia Itrix ETFs are passive index tracking instruments with low annual management fees and total expense ratios (TERs). There are no additional hidden costs. There are no fees for buying or selling other than those charged by your broker and the bid/offer spread associated with trading on an exchange.
Effective Index Tracking – Sygnia Itrix ETFs are designed to track their benchmark index as closely as reasonably and feasibly possible.
Continuous Access – Sygnia Itrix ETFs trade on the JSE just like shares during normal exchange trading hours.
Intra-day Pricing – A dedicated market maker provides continuous and competitive bid/ask prices for Sygnia Itrix ETFs.
Portfolio Visibility – The composition of the index being tracked by each Sygnia Itrix ETF is published daily on the Sygnia website.
Trading Size Flexibility – Unlike other instruments such as futures, Sygnia Itrix ETFs can be traded in small lot sizes. The unique structure of ETFs such as Sygnia Itrix ETFs also allows ETFs to be traded in large sizes without causing any market impact.
Multiple Investment Uses – Sygnia Itrix ETFs can be used by institutional investors for a variety of investment strategies ranging from an intra-day trading tool to forming the basis of long term asset allocation decisions.
Instant Global Access – Sygnia Itrix ETFs allow you to get exposure to international equity markets or regions in one transaction.
Easy to Trade – Sygnia Itrix ETFs can be traded just like shares and can be bought or sold by placing a simple order through your stock broker.
Investment in Sygnia Itrix ETFs involves a number of risks including, among others, general market risks, exchange rate risks, interest rate risks, inflationary risks, liquidity risks and legal and regulatory risks.
The value of an investment in a Sygnia Itrix ETFs may go down as well as up and past performance is not a guide to the future.
Sygnia Itrix ETFs are not capital protected. Investors may not get back the amount invested.
Sygnia Itrix ETFs may trade in limited markets which may impact bid/offer spreads.
Sygnia Itrix ETFs may be unable to replicate precisely the performance of an index.
Investors’ income is not fixed and may fluctuate.
The value of any investment involving exposure to foreign currencies can be affected by exchange rate movements.
Tax treatment of the Sygnia Itrix ETFs depends on the individual circumstances of each investor. Investors should consult their tax advisor.
For further information regarding risk factors, please refer to the risk factors section of the listing particulars.
The product fee or total expense ratio (TER) is an all-inclusive fee payable by the investors. The TER is charged using a sliding scale and includes but is not limited to management, administration, asset management, trustee, custody and audit fees. The TER is accrued daily and deducted from the semi-annual distribution fee. Please see the product fees for the tiered fee scales.
Investing in Sygnia Itrix ETFs is easy. You can invest either via your stockbroker, independent financial advisor, or directly via the Sygnia Alchemy platform. Visit How to Invest for more information.
You will need to sign up to the Sygnia Alchemy Platform, offered by Sygnia Financial Services, in order to set up a monthly debit order (minimum amount of R500 per month).
Sygnia Itrix ETFs trade on the JSE like any listed share. Continuous and tight bid/ask prices and liquidity are provided for the Sygnia Itrix ETFs by the market maker.
You simply need to instruct your broker, financial advisor or platform provider to sell your specified number of units or contact Sygnia Itrix directly. Any trades in Sygnia Itrix ETFs will be settled through STRATE. There are no product exit fees for Sygnia Itrix ETFs. Your broker may however charge a fee for executing the sale on your behalf.
In order to facilitate small trade sizes the market maker will always show an on-screen price for small volumes. It is understandable that in the financial market you are able to get a better price the larger your trade size due to the efficiencies involved. This is the case with Sygnia Itrix ETFs and therefore where you would like to trade in sizes larger than the on screen bid-offer please contact the market making desk directly on +27 11 775 7014/7812.
Prices are calculated on a net asset value basis, which is the total market value of all assets in the portfolio including any income accruals and less any permissible deductions from the portfolio divided by the number of units in issue. The price at which ETF s trade on an Exchange may differ from the Net Asset Value price published at the close of the trading day, because of intraday price movements in the value of the constituent basket of securities.
You will appreciate that an investment in Sygnia Itrix ETFs is deemed a local investment for South African investors, and while it gives you exposure to offshore stock markets, it is not freely transferable in terms of existing Exchange Control policy. The sale proceeds of any such investment will always be credited to a ZAR account which may then be used in terms of the Exchange Control rules currently in force.
Sygnia Itrix ETFs are not subject to Securities Transfer Tax (STT).
The Sygnia Itrix ETFs website includes downloads of Factsheets and Prices Since Launch that allow you to track your investment. If you would like to receive communication from the Sygnia Itrix ETF team about fund performance; new funds; and/or market related updates please email us at email@example.com to be included in our mailing list.
A distribution payment is made semi-annually.
Investments in Sygnia Itrix ETFs are subject to capital gains tax. Foreign dividends are considered income and will be subjected to income tax, exemptions may apply but please consult your tax consultant for clarity.
The Sygnia Itrix ETF performance is based on a combination of both currency and index performance. For example, the performance of the Sygnia Itrix FTSE 100 ETF is based on the performance of the GBPZAR exchange rate as well as the performance of the FTSE 100 Index. A positive performance in currency reflects a depreciation of ZAR against base currency and vice versa.
If your financial advisor or stockbroker is unable to purchase Sygnia Itrix ETFs on your behalf, please ask them to contact our call centre on 0860-794642 (SYGNIA) and we can assist them with the process or you can invest directly with Sygnia Itrix ETFs by calling the call centre. Please be aware that the call centre is unable to provide financial advice.
The main advantage of Sygnia Itrix ETFs over offshore unit trusts is generally their lower cost as a result of the passive management and that you can trade the shares at any time during the trading day. If you are comparing to moving money offshore using your foreign exchange allowance and depositing in an offshore (rather than South African) based unit trust please note that through Sygnia Itrix ETFs you get access to the Sygnia preferential foreign currency exchange rates rather than retail exchange rates. This currency exchange cost can be a big initial cost when transferring money offshore.
Investments in Sygnia Itrix ETFs by South African individuals, corporate entities (companies, close corporations, etc.), trusts, partnerships, investment clubs or stokvels are no longer considered a foreign investment requiring approval by the Exchange Control Department. It is therefore possible to invest in Sygnia Itrix ETFs without limits and without any administration hassles.
Long term insurers, Investment managers, Pension Funds and Collective Investment Schemes who are looking for quick, easy and cost effective offshore exposure can invest in Sygnia Itrix ETFs by using their offshore allowance.
The Application form may be obtained from the Application Forms page. Please note that the relevant FICA documentation needs to be supplied with your application. In the case of a lump sum investment, the money is to be deposited into the Sygnia ETP Investment or Sygnia ETF Tax-Free Savings Account Nominee’s bank account (banking details appear on the application form). Please submit, via fax or email, the application form with the proof of deposit and all FICA documentation (refer to FICA checklist). For a debit order investment please submit the completed application form together with all FICA documentation. It is important that you read and understand the terms and conditions as the declaration you sign on the application form states that you have read and understood these.
Please see the Application Forms for the relevant FICA documents required based on the capacity that you are applying in.
The minimum amount for an initial lump sum investments is R1000, and a minimum of R250 per ETF selected. The lump sum amount needs to be deposited into the Sygnia ETP Investment or Sygnia ETF Tax-Free Savings Account Nominees' account, which appears on the application form.
All complete application forms (with the correct FICA documents required), received before 2pm will be processed on the following day. Applications received after 2pm will be processed the following day or the day thereafter.
Administration fees are charged as follows:
* 0.20% (excl VAT) is levied on the proportionate value of the Sygnia ETFs below R2 million and 0.40% (excl VAT) is levied on the proportionate value of the external-manager ETFs and ETNs below R2 million.
** 0.10% (excl VAT) is levied on the proportionate value of the Sygnia ETFs above R2 million and 0.20% (excl VAT) is levied on the proportionate value of the external-manager ETFs and ETNs above R2 million.
Please note: Sygnia takes into account all your investments with us when assessing the R2 million threshold, including your non-ETF investments on the Sygnia Alchemy Investment Platform.
A Stock Brokerage fee of 0.10% excl VAT is charged per transaction, with no minimum fee payable.
Statutory charges relating to Investor Protection Levy of 0.0002% excl VAT and a nominal Strate settlement fee is charged per transaction.
These vary widely across the Sygnia Alchemy ETF fund range. For a detailed breakdown of ETF-specific fees, please refer to the Sygnia Alchemy ETF and ETN Fund Summary.
If you utilise a financial advisor, financial advisor fees are negotiated separately between yourself and your advisor.
Complete and submit an Additional Investments form (available under Application Forms) via email or fax. For lump sum additional investments you will need to deposit the amount into the Sygnia ETP Investment or Sygnia ETF Tax-Free Savings Account Nominees' account, which appears on the application form and submit the confirmation of payment via email, or fax.
If your additional investment form and funds are received before 2pm, your application will be processed the following day. If we receive it after 2pm, it will be processed the following day or the day thereafter (as per our terms and conditions).
Complete and submit a CSDP Transfer form via email, or fax. Once the form has been submitted, our admin department will liaise with the institution that you requested your holdings to be transferred to. On confirmation we will proceed with the transfer. Please note that there is 32 business day holding period on ETF and ETN securities bought with the most recent debit order.