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Category Investments

Golden opportunity

02 November 2004 Angelo Coppola

Absa launches a gold bullion-backed debenture in the exchange traded fund (eft) sector and joins three exchanges in offering institutional and retail investors the opportunity to invest in gold bullion, in a more direct fashion.

At the moment London and Australia are the other two countries offering investors this opportunity, and this on the back of news that the gold price is at 15 year highs. The eft will track the spot gold price, less fees, say Absa.

Interestingly investors who qualify can redeem in gold.

Absa Corporate and Merchant Bank (ACMB) is the originator, and this product is offered in a marketing joint venture with the World Gold Council.

ACMB are the designated market maker in the secondary market.

In what can be described as a competitor to the local Krugerrand, the eft (NewgGold) has been positioned as a cost efficient transparent access point to gold, and there are two ways to invest: directly through the JSE; or via an investment plan from Absa.

According to Dr Vladimir Nedeljkovic, the eft designer at ACMB, there is a 0.4% management fee per annum. Note this is not a collective investment scheme (CIS), and hasnt been registered as such. 

There may be some CGT implications or tax exemptions depending on the particular circumstances of each investor thought, but it would be best to have this discussion with a tax specialist.

Health warning: Take tax and specialist investment advise before offering this product to your clients, as there may be some CGT issues.

Quick Polls

QUESTION

As National Treasury mulls a two-bucket retirement system, mandatory contributions and preservation, regulation 28 is being amended to allow up to 40% of retirement fund assets to be invested in SA-based infrastructure… Which of the following retirement fund ‘tweaks’ would you consider most beneficial to your clients?

ANSWER

Give fund members emergency access to retirement savings
Let fund members invest 40% in infrastructure
Let fund members invest 40% offshore
Mandatory preservation when resigning from a fund
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