The Case For Unit Trusts Structure & Mandates Regulatory Bodies Tax on Unit Trusts Pricing and Multiple Classes Indices and Benchmarks

Unit Trusts In A Nutshell

Fund Classification Equity Asset Allocation Fixed Interest Real Estate Index Funds and Funds of Funds

Classification of Unit Trust Funds

There are over 830 domestically registered unit trusts in South Africa. About 700 of these unit trusts are domestic: the money is invested in the Johannesburg Stock Exchange or the South African Bond Exchange. The remaining invest in other countries. The dividends or returns of these unit trusts are paid out to investors in rands.

There are an additional 400 or so foreign currency denominated collective investments in South Africa. At present we do not sell these products. To invest in foreign denominated collective investments investors have to be over 18 and in good standing with SARS. At present there is a R2 Million limit per person on foreign investment. This limit does not apply when investing in domestically registered unit trusts.

The unit trust classification system has recently been overhauled. Mandates and liquidity ranges have been narrowed. This has been good news as it allows for a more meaningful comparison between different fund performances.

Geographic Classification

Funds are first classified according to the geographic focus of their underlying investments.

Domestic	Have 80% of their assets invested in South Africa.
Foreign	Have 85% of their assets invested offshore.
Worldwide	There are no registrations imposed on geographical allocations of investment in worldwide funds.

Asset Allocation Classification

At the second level, funds are classified according to the nature of their underlying investments, first by broad asset class focus, and then by their specific mandate and investment focus or style within their class.