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FAQs

We offer investors a focused range of unit trusts to suit all risk profiles and return objectives. Our unit trusts include equity funds, balanced funds, property funds, income funds, tax-free funds and global funds. We’re immensely proud that our clients have entrusted us to manage over R200 billion of their savings (as of June 2016), making us one of South Africa’s top 10 largest investment managers.

FAQs

Guide to Investing

What are unit trusts and how do they work?

A unit trust (also called a fund) is a collection of people’s savings that is invested in financial markets and other assets. It is managed by professional investment managers with the aim of growing its value over time.

Many investors pool their money by investing in the unit trust, and this pool is divided into equal units (or participatory interests), each with the same value. When you invest in a unit trust, you are allocated units according to the amount of money you invest and the price of the units on the day you buy them. Investors share in the risks and benefits of the investment in proportion to their units in the fund.

The underlying assets that the fund invests in are typically equities, bonds, listed property and cash. The composition of the assets depends on 1) the fund’s risk profile, which indicates the level of risk associated with the fund, and 2) the mandate, which prescribes what the fund may invest in.

Unit trusts are a flexible means of investing and you can sell your units at any time.

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What are the benefits of unit trusts?

Management Expertise
Unit trusts are managed by investment experts who choose the underlying investments so you don’t have to.

Affordability
Costs are relatively low compared to investing directly in shares, bonds or other assets.

Safeguards and transparency
Unit trust management companies are strictly regulated, making them transparent and safe for individuals.

Diversification
By investing a small amount, you can be exposed to a wide range of assets. This helps reduce risk.

Quick and easy withdrawals at no cost
Individuals have easy and quick access to their funds There are no extra costs involved, and no lock-in or waiting periods.

Flexible contributions
Unit trusts are flexible, allowing investors to regularly contribute relatively low minimum amounts, or make lump sum contributions at any time. 

VIEW OUR GUIDE TO INVESTING TOOL

How do I know which unit trust is right for me?

Start with determining your investment time horizon, risk tolerance and investment goals.

READ MORE HERE

What is asset allocation?

Asset allocation is the process of deciding how much money to invest in each asset class to make up your overall portfolio over the longer term. To make the most of your asset allocation decisions, you first need an understanding of asset classes and the importance of strategic (long-term) asset allocation.

There are four broad classes of assets available to you when building an investment portfolio: shares or equities; listed property; bonds; and money markets, cash and equivalents.

It is important to have different asset classes in your investment portfolio to take advantage of the different strengths and characteristics of each class. These vary in terms of their different levels of income and the circumstances in which they may rise or fall in value. Some are easier to turn into cash (if you have unexpected expenses, for example), and they all have different levels of risk.

For example, blending equities and bonds in a portfolio can help to reduce the overall volatility (or risk) of your portfolio, since often when the economy is growing strongly, shares do well but bonds perform less strongly (because interest rates would be rising).

Conversely, if the economy is in a slow growth period, shares do less well, while bonds would perform more strongly (as interest rates would be falling). Since economic growth ebbs and flows in cycles over time, in what many see as a very unpredictable fashion, deciding on a broad allocation between equities and bonds that you stick to over time can help smooth your returns.

Combining different asset classes in different proportions will help you achieve your investment objectives while taking less risk to do so.

What are equities?

We wrote a series of articles on asset classes and what they mean to you, the first of which is equities.

VIEW EQUITIES ARTICLE

What are bonds?

We wrote a series of articles on asset classes and what they mean to you, the second of which is on bonds.

VIEW BONDS ARTICLE

What is listed property?

We wrote a series of articles on asset classes and what they mean to you, the third of which is listed property.

VIEW LISTED PROPERTY ARTICLE

What is a cash or money market investment?

We wrote a series of articles on asset classes and what they mean to you, the fourth of which is on cash or money market instruments.

VIEW MONEY MARKET ARTICLE

What is a tax-free investment?

Tax-free investments (also known as tax free savings accounts), launched in March 2015, are products that any investor should consider as part of their overall investment portfolio, given that they offer the opportunity to invest tax-free over time.

The benefits include:

  • All growth in the underlying investment is fully exempt from any tax on interest, rental income, dividends or capital gains;
  • Investors can withdraw their money at any time (although at Prudential we would encourage our clients to invest for the long term);
  • Contributions are flexible – either via a lump sum or debit order; and
  • Parents can open separate accounts for their children.

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What is a living annuity?

A living annuity is an investment product that provides you with a regular income in retirement. Living annuities are purchased upon retirement, using proceeds from a retirement fund or another living annuity. The income (or annuity amount) is not guaranteed, but depends on the performance of the underlying assets. You have the flexibility to choose your income level (subject to regulations) every year and the underlying investments in the product.

Unlike a guaranteed annuity that usually ends when you die, a living annuity allows you to nominate beneficiaries. Upon your death, your beneficiaries will receive any money left in your living annuity.

Income received from a living annuity is taxed at your marginal tax rate.

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What is a feeder fund?

In its simplest form, a feeder fund is a fund that invests in a single master fund. The master fund is responsible for all the investment decisions. At Prudential, we offer feeder funds for South African investors who would like to invest offshore, but do not wish to convert their rand into the required foreign currency. These investors therefore invest into the rand-based feeder fund to gain exposure to the foreign currency-based fund. Their performance will mirror the international fund, but their returns will then be in rand.

Where can I read more about investing?

Visit our Insights page to read more about our views on the markets, commentary from our fund managers and other interesting articles.

VIEW INSIGHTS

Alternately, follow us on:

Tax-Free Savings

What is a tax-free savings product?

Tax-free savings (also known as tax free investments), launched in March 2015, are products that any South African investor should consider as part of their overall investment portfolio, given that they offer the opportunity to earn tax-free growth on the contributions to these unit trust funds. All returns earned on the invested contributions are free from South African tax on interest, capital gains and dividends.

Download our comprehensive Q&A guide. 

What are the benefits of unit trusts?

  • All growth in the underlying investment is fully exempt from any tax on interest, rental income, dividends or capital gains;
  • Investors can withdraw their money at any time (although at Prudential we would encourage our clients to invest for the long term);
  • Contributions are flexible – either via a lump sum or debit order; and
  • Parents can open separate accounts for their children. 

VIEW OUR TAX-FREE SAVINGS FUNDS

What are the limits on contributions?

  • Annual contributions are limited to R33 000 per tax year (either via a lump sum or debit order) per individual, and a maximum contribution amount of R500 000 over a lifetime.
  • Growth in the investment does not count toward the contribution limits.
  • The reinvestment of distributions (back into the Unit Trusts) does not count towards the annual and lifetime contribution limits.
  • Should individuals withdraw funds from their Tax-Free investments, they are not allowed to Include these amounts as an addition to their future contribution limits.
  • If an individual exceeds these limits, the South African Revenue Service (SARS) will impose a penalty of 40% of the amount in excess of the limits. It remains the responsibility of the investor to ensure that they do not breach these limits.

Which funds does Prudential offer in the tax-free range?

  • Prudential Balanced Fund
  • Prudential Dividend Maximiser Fund
  • Prudential Enhanced Income Fund
  • Prudential Enhanced SA Property Tracker Fund
  • Prudential Inflation Plus Fund

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What are the minimum investment amounts?

  • Debit order: R1000 per month
  • Lump sum: R10 000

Need more information? Download our comprehensive Q&A guide or contact our Client Services Team on 0860 105 775 or at query@prudential.co.za

Investment Costs

What costs will I incur when investing with Prudential?

We do not charge any upfront fees, so your full investment amount goes towards purchasing units.

Our unit trusts charge an annual management fee that is calculated daily and factored into the calculation of the daily price for each fund. In other words, the price and performance figures published for each fund are net of (i.e. after) asset management fees.

The annual management fee for certain funds includes a performance-based component. Click here for a detailed description of our performance fees. Our tax-free unit trusts do not charge performance fees.  

Other charges include operating costs such as audit fees, custodian and trustee fees, bank charges, and taxes (e.g. VAT); these are included in the unit trust’s total expense ratio (TER), which is available on each fund fact sheet. Transaction costs (TC’s) incurred in the management of the fund are disclosed separately on the fund fact sheet.

If you are investing via a Financial Adviser, any initial and/or ongoing financial adviser fees will be negotiated between you and your adviser. 

In summary, the total investment charge (IC) that you will see on fund fact sheets is made up of the TER and transaction costs (TC).

What is Effective Annual Cost (EAC) and how do I calculate it?

The Effective Annual Cost (EAC) provides you with an accurate comparison of the full charges you incur when you invest in different financial products. Your personal EAC is made up of four cost components (investment advice, investment management, administration and “other”). These are added together and expressed as an annual percentage of the investment amount. Your total EAC depends on your own preferences, like whether you choose an initial lump sum or monthly contribution, and your Financial Adviser fees. 

To calculate your EAC visit our online EAC tool. Alternatively, you can contact our client service centre to request the EAC of your portfolio.

EAC TOOL

Basic Fund Information

Is there a minimum amount I have to invest?

Each of our unit trust funds has a minimum lump sum and debit order (if applicable) investment amount, which is available on the fund detail page.

VIEW MINIMUM INVESTMENT AMOUNTS

When will my unit trust distribute its income?

The distribution frequency for each of our unit trusts is included on the fund details page and fund fact sheets. It can range from monthly to annually, depending on the fund.

Note that the annual management fee and other operating expenses will be paid from the fund’s income before it is distributed or reinvested back into the fund.

OUR FUNDS

Do I have the choice of having distributions reinvested or paid out to me?

For investments into our discretionary or tax-free unit trusts, you can have your distributions either paid to your bank account or reinvested in your fund. If you choose to reinvest your distribution, we will purchase additional units in your fund(s). 

For investments into our living annuity product, all distributions will automatically be re-invested.

OUR FUNDS

What if I want to access my money?

Simply complete a withdrawal instruction form and send it through to Prudential. Depending on the unit trust, it will take between 1 and 3 days for your money to reflect in your bank account after all the required documentation has been received. Alternatively, you can submit your instruction online provided you have registered for a transational online account.

DOWNLOAD THE SA UNIT TRUST WITHDRAWAL INSTRUCTION FORM

ALL FORMS

Can I have my debit order on any other day than the 1st of the month?

No. Debit orders can only be collected on the first working day of every month.

Where are the daily prices published?

The daily price for each fund is updated by 18h00 each day. You can download all prices across all funds for the past 12 months by following the red button.

PRICES

 

What are the daily cut off times for investing?

Our daily cut-off times are as follows:

  • 11h30 for new investments in the Prudential Money Market Fund
  • 13h30 for new investments relating to all other Prudential funds

Investing with Prudential

How do I invest with Prudential?

Follow this simple guide to get started.

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How can I view my portfolio?

An investment summary statement will be sent to you on a quarterly basis. The statement will contain the value of your investment as at the end of the most recent quarter. 

You can also view your portfolio details at any time by registering for access to our online portal.

DOWNLOAD INVESTOR ONLINE REGISTRATION FORM

Alternatively, you can contact our Client Service Team on 0860 105 775 to request any information about your portfolio.  

Can I change my unit trusts?

Yes, you may switch into and out of our range of unit trusts as your circumstances change. We do not charge any switching fees. However, a capital gains event will triggered. 

DOWNLOAD SWITCH INSTRUCTION FORM

You may also submit switch instructions online for some of our products, provided you have registered to transact online. 

Do I have online access to my investment?

Yes. When completing your new investment application form, you will be able to choose from either transactional access or view-only access.

DOWNLOAD INVESTOR ONLINE REGISTRATION FORM

Can I apply for unit trusts online?

Yes, for now you can complete an online application form for South African Unit Trusts. We will be introducing online forms for Tax-free and Namibian investments.

ONLINE APPLICATION FORM

Can Prudential offer me investment advice?

No. Although we are not authorised to provide financial advice, we can provide you with the information you need to help you make an informed investment decision.

If you prefer to speak to an independent financial adviser (IFA), we encourage you to visit the Financial Planning Institute of Southern Africa website to find an IFA in your area.

FIND AN ADVISER

How do I sell/ cash out my unit trusts?

You can either complete the relevant withdrawal form or submit a withdrawal instruction via your online account (provided you have transactional access). The daily cut-off times for receiving your instruction are as follows:

  • Withdrawal form - 11:30 for withdrawals from the Prudential Money Market Fund
  • Withdrawal form - 13:30 for withdrawals from all other Prudential funds
  • Online - 10:30 for withdrawals across all Prudential funds

FORMS AND DOWNLOADS

Do you have tools to help me make an informed investment decision?

Yes. We’ve designed four investment tools to help you plan and achieve your investment goals on your path to living the life you want. Choose from a retirement calculator, a shorter-term goal calculator and a fund selector, as well as a cost calculator to compare costs across all types of investments. If you get stuck along the way or if you need more information, please feel free to contact our Client Service Team or chat online. 

INVESTMENT TOOLS

How can I find out if my investment has performed?

We will send you a detailed statement at least every quarter. The statement will confirm the movement of your investment over the period with your individual performance. Alternately, you can access your investment value online via your online account or by contacting our Client Service Team.

CONTACT US

Can I invest offshore with Prudential?

Yes. We have a range of offshore funds to suit your investment needs.

VIEW OUR FUNDS

How do I lodge a formal complaint?

We take your concerns and queries very seriously, and will always do our absolute best to engage with your directly, promptly and in a meaningful way. Please send any complaints that you may have in writing to our Compliance Officer, either via email to compliance@prudential.co.za or post to PO Box 44813, Claremont, 7735.

Investment Taxes

What tax will I pay on my investment?

The tax you are required to pay largely depends on the type of product you are invested in, your country of residence for tax purposes and your investor classification (e.g. individual, trust etc.).The two main taxes include:

Withholding Tax

Withholding Tax is levied against the dividends, interest and real estate income that you earn. Living Annuity and Tax-Free Savings Investment Accounts are exempt from Withholding Tax, however tax may be withheld on income earned within foreign jurisdictions.

Capital Gains Tax

Capital Gains Tax (CGT) is applicable when selling units in a fund. Tax is levied when units are sold at a higher price compared to the weighted average cost that you paid for them (also referred to as your weighted average base cost or WABC). Where a capital loss is incurred, the amount can be used to offset future capital gains. Living Annuity and Tax Free Savings Investment Accounts are exempt from CGT.

For more information please contact our Client Service Centre, a tax practitioner or your financial adviser.

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BBBEE Status

What is Prudential’s BBBEE status?

Prudential is a Level 2 Contributor.

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