New Money Market Option for etfSA

The etfSA STeFI Linked Money Market Deposit, Managed by Nedbank

Investors in the etfSA Investor Scheme^TM now have the option of a money market investment which brings a new asset class (cash) , to join equities, bonds, commodities, property and foreign investments, which are already available as ETFs or ETNs on the etfSA platform,

The money market deposit is invested with Nedbank, who guarantee etfSA investors that they will receive the STeFI (Alexander Forbes Short-Term Fixed Interest Composite Index) interest rates, less a 0,15% management fee levied by Nedbank.

The current interest rate, net of the Nedbank fee is 5,45%, which is very competitive with money market products, such as unit trust, bank fixed interest deposits, etc. The daily rate will be published on the etfSA website (http://www.etfsa.co.za/) in the window on the home page headed “etfSA STeFI Linked Money Market Deposit”.

The STeFI index weights the interest rate received on call account and NCD instruments, issued only by Banks, Government and Parastatals, split between call to 12 month fixed deposit paper, according to the formula below.

The key benefit for an investor in the etfSA STeFI Linked Money Market Deposit is that they receive an interest rate, which benefits from exposure to long-dated instruments (up to 12 months), but the investor receives that interest rate without requiring to lock-in investments for up to 12 months. The etfSA STeFI Linked Money Market Deposit is completely liquid and can be bought and sold at any time by investors, with no minimum or maximum investment period required.

The features of the product are:

• A capital guarantee of the nominal capital amount invested, with monthly interest earned and paid to the investor in the form of additional units issued.
• The benefits of a weighted fixed deposit type interest rate, but with the ability to liquidate the investment at any time, with no exit penalties.
• A liquid and transparent investment for risk averse investors
• A product to “park” funds on a temporary basis to take advantage of market opportunities or while waiting for market volatility or global uncertainty to subside.
• In conjunction with other ETF products, giving exposure to different asset classes, a very low cost balanced portfolio covering assets over all classes, now including money market (cash), can be constructed.
• Minimum investments are R10 000 for lump sums and in multiples of R1000 thereafter for additional investments and R1000 per debit order.

The etfSA STeFI Linked Money Market Deposit offers a competitive interest rate and accessibility compared with unit trust money market products and is a valuable addition to the product options available to investors on the etfSA Investor Scheme^TM platform. Performance data is as follows:

In order to access this product, which is made available by Nedbank exclusively to etfSA for retail clients, an account needs to be opened at http://www.etfsa.co.za/. All account openings can be done online or the application forms can be downloaded. Existing etfSA clients only have to complete an Additional Investment Form. Financial Advisors can register on the platform to receive trailing commissions, if approved by their clients they bring to the product, by filling in a broker accreditation form and by providing their FSP license details – the accreditation forms are also available online.

A “window” has been opened on the website home page for this new product. A fact sheet, information document, application forms and daily interest rate can be viewed or downloaded from this window.