A 60-year old, Sowetan reader from Newcastle, Kwazulu-Natal, who’s keen to invest in the FTSE JSE Swix has written to Money to find out more about and how she can invest in the index-tracker. Money unpacks.

Investing in the FTSE JSE Swix or Shareholder Weighted Index means investing in a fund that tracks this index. The index is made up of all the shares on the JSE. 

The Swix differs from the regular FTSE JSE All-Share index in that it weights shares in the index in line with the amounts listed on a company’s shareholder register in South Africa, and excludes amounts held by shareholders on foreign exchanges.

This means companies that list their shares in SA and a foreign exchange will have lower weights in the Swix than in the All-Share index.

There is only one fund that tracks the Swix itself and three that track the Capped Swix where maximum weighting of a share is 10% of the fund. There are more that track the FTSE JSE Shareholder Weighted Top40 index or Swix 40. This is the index of the top 40 largest shares on the JSE – largest when the share price is multiplied by the number of shares in issue – that is weighted in line with shares registered in SA.

The one fund that tracks the FTSE JSE Swix index is the Sygnia Swix Index Fund. You can invest in this directly on the Sygnia website if you have a lump sum of R20,000 to invest or can invest R500 a month. 

Old Mutual offers the Capped Swix index also for a R20,000 lump sum or R500 a month and you can invest online at www.oldmutualinvest.com.

Momentum also offers a Capped Swix Index Fund for a R2,000 lump sum or R250 a month. You can invest online at www.momentuminv.co.za.

The Satrix Capped Swix ALSI Fund is available on the Satrix Now platform and there are no minimum investment amounts.

Unit trusts only have one investment management fee and the fund may incur some trading costs – these are paid in the fund and reported jointly as the total investment cost.

The total investment cost of the Sygnia Swix Index Fund is 0.55% of your investment or 55c of every R100 you invest, on the Old Mutual fund it is 0.97%, on Momentum it is 0.59% and on Satrix it is 0.87%..

There are four exchanged traded funds (ETFs) and one unit trust fund that track the FTSE JSE Swix 40. ETFs are unit trust funds that hold a basket of shares but the fund itself is listed on the stock market like any other share. To buy them you need to use a stockbroker which can involve high costs and high minimum amounts. 

Fortunately, there are some lower-cost investment platforms that offer access to ETFs and charge you a platform fee and lower brokerage fees. These can also accommodate much lower minimum amounts in a cost-effective way.

The four ETFs are from Absa, Satrix, Stanlib and Sygnia, and the unit trust is available from Satrix.

The four ETFs can be purchased on lower-cost investment platforms like etfSA and Easy Equities.

etfSA offers all four ETFs on its Investor Plan in which you can invest as little as R1,000 lump sum or R150 a month on an ongoing debit order. You can invest online at www.etfsa.co.za.

You will pay 0.65% a year of the amount you have invested for the Investor plan – that is 65c for R100 and the stock brokerage fee of 0.08% - or 8c for every R100.

The Satrix, Stanlib and Sygnia Swix Top 40 ETFs are available on the Easy Equities platform which accepts investment amounts of any size. You can invest online at www.easyequities.co.za.

The cost is 0.64% or 64c per R100 invested to use the platform.

You can also invest in the Sygnia ETF on the Sygnia website if you have R1,000 to invest as a lump sum or R500 ongoing. The cost of the ETF is 0.36% which equates to 36c per R100 invested but there are also brokerage fees of 0.1%, an investor protection levy of 0,0001% and a Strate fee.

You can also invest in the Satrix Swix40 ETF and the Satrix Swix40 unit trust on the Satrix Now platform  which also has no minimum investment amounts. You can invest online and it will cost you 0.5% of your investment in the ETF or 50c for R100 if you invest more than R500,000. 

If you invest in the Satrix unit trust there is no platform fee but the management fee is 0.48% and the costs around 0.11%, making a total investment cost of around 0.59% or 59c for every R100. 

You can also buy the ETFs using an online brokerage account like those offered by the banks.

Standard Online Share Trading, for example, offers access to all four of the ETFs on its Auto Share Invest platform.

You can buy online through the bank’s internet banking or mobile app if you have at least R250 to invest. The brokerage fees are 0.25% of your investment but you will also pay statutory charges that apply to all trades such as Strate fees and an investor protection levy. Standard Bank says on a R500 trade you could pay more than R10 in statutory charges plus R1.22 for the platform. 

In addition if you plan to invest for the long term and not to trade frequently you will incur an inactivity fee on the Standard Bank platform. If you invest in January and do nothing else for the rest of the year, you pay a R125 fee for the year, but if you invest at least every two months, you won’t pay this fee.

When you buy popular ETFs and unit trusts, most of the financial institutions also let you hold your investment in a tax-free savings account. This means you can – if you haven’t yet exhausted this annual limit – hold the investment without paying dividend tax and without incurring capital gains tax when you sell.

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