Wednesday, 26 April 2017

Industry

Online ETF platforms compared

Patrick Cairns




This week passive investment manager CoreShares announced that it had launched its own online investment platform called 'CoreShares Online'. It is designed to provide access to its suite of exchange-traded funds (ETFs) to investors who don't have their own stock broking account.

CEO Gareth Stobie said that the intention is to make investing easier and more cost effective. For most, if not all retail investors, being able to access CoreShares' products directly will be cheaper than doing so through a traditional stock broker.

The move by CoreShares follows only a few weeks after asset manager Sygnia signed a deal to acquire the db x-trackers ETFs from Deutsche Bank. Discussing its plan for these funds, Sygnia said that it too has plans to make its ETFs available through an online platform that will also focus on lowering the cost of access.

There is clearly a trend in the industry to use technology to make exchange-traded products more accessible. When Satrix launched the first ETFs in South Africa in 2000 investors could only buy them through a stock broker or Satrix's own investment platform, which was (and remains) a bit unwieldy and not particularly cost effective. But Satrix too has introduced an online option through SatrixNOW, which is supported by Easy Equities and uses the same technology.

Investors now have a range of options available to them, and it is therefore worth looking at what the various platforms offer.

CoreShares Online

As the latest addition to the market, CoreShares Online has developed a very user-friendly look and feel. It is also mobile-friendly, ensuring that it appeals to a generation of investors who want to be able to do everything on their phones.

At brokerage of 0.1%, the transaction fees are the lowest of any platform currently available. However, there is an annual charge, which its current competitors do not have.

Costs: Annual platform fee of 0.3% plus VAT. Buying and selling incurs brokerage of 0.1% plus VAT. CoreShares Online also offers a tax-free savings account at the same costs.

Products available: CoreShares Top 50, CoreShares Proptrax SAPY, CoreShares Proptrax Ten, CoreShares Preftrax, CoreShares Divitrax, CoreShares LowVoltrax, CoreShares Green, CoreShares Equally Weighted Top 40, CoreShares S&P Global Property, CoreShares S&P 500.

Minimum investments: R250 per month or R1 000 lump sum.

Easy Equities

Although Easy Equities is not an ETF-only platform, it is such a compelling offering that it has to be included in any comparison. The online broker was the first to offer truly low-cost access to exchange-traded products in South Africa.

Opening an account with Easy Equities will also give investors access to all of the ETFs and exchange-traded notes (ETNs) listed on the JSE, which is not currently possible through specific product providers. Easy Equities also offers fractional share ownership, which means that investors can buy up to 1/1000th of a security. This means that their full contribution is always invested and there aren't any leftover funds sitting in cash.

Costs: Buying and selling products attracts brokerage of 0.25% plus VAT. There is no ongoing charge. Easy Equities also has a tax-free savings account offering at the same fees.

Products available: All JSE-listed exchange-traded products. ETNs are not however available in a tax-free savings account.

Minimum investments: No minimums.

SatrixNOW

The SatrixNOX experience is based on the Easy Equities platform and so therefore has all of the same benefits, including fractional ownership. It however only offers access to Satrix ETFs.

Costs: Brokerage of 0.25% plus VAT when buying or selling funds. There is no ongoing charge. Satrix also has a tax-free savings account offering at the same fees.

Products available: Satrix 40, Satrix DIVI, Satrix FINI, Satrix ILBI, Satrix INDI, Satrix Property, Satrix RAFI 40, Satrix RESI, Satrix SWIX 40.

Minimum investments: No minimums.

Absa Stockbroking ETF only account

This unique offering from Absa Stockbroking allows investors to open a dedicated account for investing in ETFs. What is particularly compelling, however, is its tax-free savings account option, which comes with reduced fees.

As with Easy Equities, investors have access to the full range of JSE-listed ETFs. There is also no monthly or annual fee.

The one drawback of Absa Stockbroking's offering is that it currently does not cater for monthly debit order contributions. It however plans to introduce this facility soon.

Costs: Buying and selling ETFs attracts brokerage of 0.20% plus VAT. There is no minimum brokerage in the tax-free savings account, but a minimum brokerage of R20 is charged in the standard ETF only account. There is no ongoing charge.

Products available: All JSE-listed ETFs.

Minimum investments: There are no minimums on once-off investments. The planned minimum for monthly debit orders is R250.

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