The cost of owning exchange traded funds (ETFs), such as the Satrix and Itrix products listed on the JSE, have come down thanks to tax changes.
In terms of an amendment to the Uncertificated Securities Tax Act, the purchase of listed Collective Investment Schemes - namely, exchange traded funds - are no longer subject to Uncertificated Securities Tax (UST).
Before the amendment, investors who bought ETFs were subject to the UST charge of 0.25 percent of the value of the securities purchased.
"Satrix is already well known for its low-cost structure, but the exemption from UST will make trading in Satrix securities even more cost effective," Mike Brown, the general manager of Satrix, says.
"Investors will now only pay stockbrokerage commissions and JSE/ Strate settlement charges when purchasing Satrix ETFs."
Brown says that "normal shares listed on the JSE will still be subject to UST on purchase, so the exemption from the payment of the 0.25 percent tax on ETFs, such as Satrix, provides a valuable competitive advantage to investors who seek exposure to the main JSE indices by purchasing Satrix. This added cost efficiency for Satrix should appeal to both retail and institutional investors, who are cost-sensitive."
He says the UST Act, until amended, imposed a double taxation for Satrix shareholders, because UST had already been paid by the managers of Satrix when they bought the underlying shares that make up the index.
Brown says the amendment now levels the playing field between ETFs and other unit trusts, because UST is not levied on a change in the ownership of unit trust funds.