Does Sygnia offer advice?
Sygnia does not offer comprehensive financial planning advice. The Sygnia RoboAdvisor is designed to offer a low-cost level of advice based only on the information disclosed by you. If you change any of the investment parameters (e.g. your recommended risk profile), the advice given will no longer hold.
We encourage investors to speak to a financial advisor if they are unsure of their requirements.
What is the minimum I have to invest?
You can start investing with a lump sum of R10 000 or a debit order of R500 per month.
What products am I investing in?
All the products which underpin your customised investment strategy are either unit trusts, exchange traded funds, money market funds or cash.
What fees am I paying?
The Sygnia RoboAdvisor does not charge a fee for the advice given. The management fees applicable to your customized investment strategy are 0.50% per annum, including VAT.
The other fees that apply to your investment are the stockbroking and JSE fees applicable to buying and selling securities on the stock exchange, together with your portion of the audit, trustee and custody fees applicable to the unit trust. These typically amount to 0.05% per annum. The Total Expense Ratio regularly disclosed to you will add up the management fees and the other costs to reflect the true cost of your investment.
Who manages the products I invest in?
The domestic index-tracking products are managed by Sygnia’s investment team which has a 13-year track record in managing index-tracking funds in South Africa. Other products, including international products and money market funds, may be managed by by third-party asset managers selected by Sygnia based on their expertise and cost.
What is an index?
An index is effectively an imaginary portfolio of investments designed to measure the overall performance of a particular market, or a sector of the market. When prices of stocks go up, so does the index, and vice versa. Indices are produced by stock exchanges, such as the JSE, or private companies (e.g. S&P). All indices follow a particular calculation formula which remains constant over time. For example, market capitalization-weighted indices include companies weighted in proportion to their relative size, with larger companies constituting a larger percentage of the index.
What is an index-tracking fund?
Index-tracking funds, or passively managed investments, are investment strategies which aim to mirror the performance of a particular index (e.g. FTSE/JSE All Share Index), rather than outperform that index. Index-tracking funds offer a low-cost way to invest in equities, property and bonds.
What is the difference between active and index-tracking funds?
Actively managed funds are managed by specialist portfolio managers who aim to outperform a particular benchmark (typically a market index) over time through superior selection of stocks that they choose to invest in. These decisions are based on extensive research. However, as the overall market is a zero-sum game (i.e. for every buyer there is a seller), actively managed funds can either get it right and outperform the benchmark, or get it wrong and underperform the benchmark. While actively managed funds charge significant fees for the expertise, they can have several disadvantages:
- Few active asset managers outperform market indices
- Fewer still do so consistently
- And even fewer do so after all the costs of active management have been deducted
Most importantly, once you diversify your investments across a number of active asset managers, it is unlikely that all of your choices will outperform the market index at the same time. Hence, as an investor, you are likely to earn market index-type returns before costs are deducted.
In comparison, index-tracking funds aim to deliver the performance of a market index at a low cost. Hence, index-tracking funds are more suitable for “buy and hold” investors who want to take a long-term view and not worry about the short-term outperformance or underperformance of their investment choices.