Investors now get onshore tax breaks plus offshore exposure – db X-trackers

Wehmeyer Ferreira, head of db X-trackers in South Africa.

Government’s tax-free savings (TFS) dispensation has added further impetus to the growth of db X-trackers, the range of JSE-listed exchange traded funds that track the performance of leading offshore indices.

db X-trackers are one of the few investment platforms that qualify as tax-free savings instruments while simultaneously offering investors all the benefits of international diversification, says Wehmeyer Ferreira, head of db X-trackers in South Africa.

Under new National Treasury rules, the returns on various products are tax-free within an annual limit (a R30 000 TFS commitment by the investor) and a lifetime ceiling (R500 000).

Index-tracking exchange traded funds (ETFs) like db X-trackers qualify as a tax-free instrument.

Ferreira points out: “Tax-free savings status clearly adds to the attraction of db X-trackers.

“Retail investors now enjoy tax-free returns while benefiting from offshore diversification via products that are JSE-listed, bestowing additional peace of mind for local consumers.”

Additional advantages include:

• Low costs while capturing the performance of leading developed markets
• The chance to tap into markets and sectors that are often beyond the average investor’s reach
• A proven rand hedge during a period of rand volatility

db X-trackers are already on a steep growth trajectory. Across the range, assets under management rose by 43.8% in the 10 months to the end of October, 2015.

Says Ferreira: “Growth of this magnitude is clearly attributable to a wide range of factors, though qualification under TFS rules is certainly a further positive for us.

“This factor may come into sharper focus in the coming weeks as retail investors examine their tax-free savings options before the end of the 2015-16 tax year on February 29.”

db X-trackers provide index-tracking exposure to equity markets in the USA, UK, Europe and Japan and a mix of leading international markets via the MSCI World Fund.