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Share scheme aims to empower and educate

#Invest offers a managed portfolio at a fraction of the price.

The stock market in the provocative words of Julius Malema, leader of the EFF, is the preserve of ‘white monopoly capital’. Regardless of whether this is or isn’t true is an emotive subject in South Africa today, but one cannot deny the perception that the JSE and investing in general is out of reach for many South Africans.

While companies like Satrix, JustOneLap and ETFSA have done a lot to educate the market and make investing simpler and cheaper, Purple Group’s Easy Equities is the cheapest and simplest model on the market today. It has grown stock participation – by ordinary individuals – by 15%, according to CEO Charles Savage. Now it is offering ‘bundles and baskets’ of shares to those investors who either find stock selection overwhelming or who prefer the idea that a professional is managing a portfolio on their behalf.

Anthea Gardner, the CEO of Cartesian Capital is one of the first independent managers to offer an actively managed portfolio (dubbed a bundle) of shares, under the name #Invest, on the platform. She has done so in conjunction with Cliff Central founder Gareth Cliff. The idea came about because the pair present a morning money chat show, called The Money Shot, which is downloaded by thousands of listeners, most of whom are under the age of 30.

“As a result of our morning discussions many people email me for stock advice – they have R20 000 to spend, and want to know what stock should they buy,” says Gardner. “For individuals with small sums of money to invest it is difficult to get stock advice. To have a stock broking account which is personally managed, one needs to have hundreds of thousands to invest.”

The next best option for these investors is an online share-trading platform where investors take responsibility for their own buying and selling. However, first time or younger investors may not have the knowledge to make use of this service and although less expensive, the costs do add up.

“Using the Easy Equities platform we are offering the investor in the street access to a managed portfolio with as little as R100. They are getting a similar [if slightly less personalised] service to the individual with hundreds of thousands to invest,” says Gardner.

“We are trying to ‘uberise’ a part of the economy that is available to just a few,” says Cliff.

Gardner has developed four investment portfolios under the #Invest brand. Each portfolio has its own mandate: conservative income, growth and income (stable), growth (balanced) and aggressive, which is primarily invested in JSE listed shares.

The aggressive portfolio includes stocks like EOH, Aspen, the JSE, Steinhoff and Mediclinic. The conservative portfolio on the other hand is invested entirely in bonds.

Of course, the service does not come for free. Easy Equities brokerage and statutory costs are 0.64%. In addition, #Invest will cost 0.85% to invest in the Conservative portfolio, 0.9% for the Stable, 1% for Growth and 1.25% for Aggressive growth.

Once added up these fees start to compare with the price of unit trusts, which cost 1.5% for the average equity fund – thus negating the cost and simplicity of the Easy Equities platform.

In addition, while the bundle of shares looks like a unit trust (where money is pooled to buy shares), it is not, because it is not regulated as a Collective Investment Scheme by the Financial Services Board.

This means that capital gains tax is incurred every time the manager sells a stock in one of  #Invest’s growth portfolios. However, Gardner is aware of this: “I do not plan to buy and sell frequently, because I am very aware of the CGT implications to the investor. This why I have positioned the portfolio accordingly.”

She notes that in most unit trusts, the minimum investment is R1000 per month or R20 000 lump sum – which excludes many South Africans. In this case an investor can start with R100.

In addition, she says, a unit trust is relatively opaque, whereas, with this product individuals can see which shares they’re invested in, and learn how shares move up or down.

“Part of the problem in the world today is exclusivity. Too many people feel excluded,” says businessman Christo Wiese who attended the launch of #Invest. “In addition, people who are not in commerce – from a street sweeper to a dentist – think that people who make money on the market have a secret recipe that only they know and understand. What I can tell you is that there is no secret recipe. There are a lot of ways to make money, but there is no quick way – you must do it brick by brick [or share by share].”

By investing in familiar brands like MTN, Discovery, Woolworths investors have a stake in the economy, he says. They can follow the ups and downs of these companies. “This is a transformative initiative.”

This is not just about bringing another investment product to the market, says Gardner. “This is about including thousands of South Africans who are currently excluded from access to asset managers and the stock market; and empowering them through direct stock ownership while hopefully educating along the way.”

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