Affluence Capital Collective Investment Banner

Collective
Investments

One or more unit trusts, consisting of multiple assests and holdings.

Collective investment schemes (CIS) are investment arrangements, where capital is pooled together from members of the public to be invested in a diversified portfolio of assets. These assets can include stocks, bonds, real estate, commodities, and other asset types.

The fund is managed by a professional fund manager or management team, who makes investment decisions on behalf of the investors based on the fund’s investment objectives. The fund managers are responsible for buying and selling assets within the fund, with the aim of generating returns for the investors, who share the risk but also the performance of the underlying assets.

Some of the main examples of CIS include:

  •  Unit trusts: Known as Mutual Funds in the US, these are CIS that offer various funds with different investment objectives and asset classes, allowing investors to buy ‘units’ in the fund. Professional fund managers handle investment decisions and asset allocation.
  • Tax Free Investments (TFI): A financial product that allows South African residents to invest with no capital gains taxes or income taxes. One may invest a maximum of R 36 000 per annum in a TFI, with lifetime contributions being limited to R 500 000. By implication, if you max out contributions to your TFI every year, you’d have about 14 years to do so.
  • Exchanged Traded Funds (ETFs): These are similar to unit trusts in that they can offer you exposure to a diversified set of assets. However, ETFs are traded on stock exchanges and usually track an index of stocks. They are also usually more of a passive investment type – as opposed to unit trusts that are often more actively managed by fund managers.

Most of these investment CIS can facilitate lump sum investments as well as monthly debit orders, making it a convenient way to practically invest for many.

When investing in any product, including the above – one must take into account:

1. Fees: advisor, platform, fund manager, transaction costs etc.

2. Fund performance: although past performance is not necessarily an indication of future performance.

3. Risks: currency fluctuations, institutional risks, geopolitical turmoil etc.

4. Asset Allocation: asset classes, sectors/industries but also regions/geographies.

5. Fund Manager: their tenure, style and track record.

Speak to one of our financial professionals to find out which products are suitable to you and your financial scenario and goals.