Frequently Asked Questions

Element Assist 

  1. Who is Element Investment Managers?
  2. Who can I speak to?
  3. Can I visit Element Investment Managers? 

 General

  1. What is a Unit Trust?
  2. What are the benefits of investing in a unit trust?
  3. Who should invest in a unit trust?
  4. What is a redemption?
  5. What is a switch?
  6. What is forward pricing?
  7. How long should I be invested in a unit trust?
  8. How soon are my funds available if I redeem my units?
  9. Are there any guarantees? 
  10. How do I lodge a complaint?

Safety and Security

  1. Is my money that I invest in a unit trust safe?
  2. What is FICA?
  3. What is Money Laundering?
  4. Will my personal information remain confidential? 

Transactional information

  1. How do I open an account with Element Investment Managers?
  2. Can I open an account for my children or other persons?
  3. What fees do I need to pay?
  4. Do I pay a performance fee?
  5. How are the fees recouped from my investment?
  6. How long does it take to execute a transaction?
  7. What documentation can I expect to receive regarding my investment?
  8. How often do I receive statements?
  9. Can I request that the proceeds from redemption be paid to a third party?
  10. What are unit trust distributions? 

Tax

  1. How are unit trusts taxed?
  2. Are there CGT implications when I switch between funds?
  3. What is an IT3(b)?
  4. What is an IT3(c)? 

Linked Investment Service Provider or IFA 

About Financial Services Providers

  1. Find an advisor: www.fpi.co.za
  2. Find out about your financial advisor
  3. IFA registration
  4. Do you pay a trail commission?
  5. What about VAT?

Element Assist

1. Who is Element Investment Managers?

Element Investment Managers is an independent, owner-managed company established in 1998. We provide discretionary investment management services to individuals, institutions and retirement funds. The company specializes in investments in the South African market. In addition to segregated portfolios, Element Investment Managers manages a range of unit trusts and pooled funds. 

Element Investment Managers has been a pioneer in the field of the promotion of ownership. This has been implemented through an overlay of constructive engagement with the management of the companies in which we invest. Element Investment Managers is also one of a few managers in South Africa that manages Shari'ah compliant investment portfolios on behalf of Islamic investors. 

2. Who can I speak to?

You may speak to any of our trained client services team on 021 426 1313.  

3. Can I visit Element Investment Managers?

You are welcome to visit our offices which are situated on the 25th Floor of Atterbury House on 9 Riebeek Street in Cape Town. 

 General

1. What is a Unit Trust?

A unit trust, also known as a Collective Investment Scheme (CIS) portfolio, is a professionally managed spread of investments in which a group of investors pool their money. A unit trust portfolio typically invests in shares, bonds, money market instruments and other investments. This pool is then divided into equal units, also referred to as participatory interests, in which investors share in the fund's gains, losses, income and expenses on a proportional basis. 

2.  What are the benefits of investing in a unit trust?

  • Diversity: The professionals who manage the unit trust portfolios, known as investment managers, spread the risks involved in investing by investing in a variety of underlying assets.  By investing a small amount in a unit trust, you are exposed to a wide range of assets.
  • The investment amounts are not prohibitive: With unit trusts, a small sum allows you to invest in a well-diversified portfolio.  The minimum amount to invest in the Element Unit Trust Funds is a lump sum of R5 000 and/or R500 per month for debit orders.
  • Your investment is easily accessed: You can redeem your unit trust investments (convert them back into cash) whenever you need the money.  There are no minimum investment periods, although the Association for Savings and Investment SA (ASISA) recommends an investment horizon of between 3 and 5 years.  We do not charge and entry fee or exit fee, therefore, there is no further costs to redeem your units.
  • Unit trusts come with safeguards: Each unit trust fund is required by law to appoint an independent trustee who looks after all the cash, shares or bonds that your fund owns.  The trustee is an authorised bank or financial institution that is not affiliated to the management company or the asset manager in any way.  This means that if anything happens to the management company or the asset manager your investment will not be affected. 
    Every unit trust fund has a mandate and supplemental deed, which is a legal contract that sets out its investment objectives and how the fund intends to invest to achieve these objectives.  A fund's mandate gives you an indication of how risky the investment is.  The trustee of the fund is responsible for ensuring that the management company complies with the fund's mandate. 
    In addition, unit trusts are regulated by the Collective Investment Schemes Control Act, No 45 of 2002 ("CISCA") which prohibits investment managers from taking certain risks. 
  • You are able to find out or calculate the value of your investment quite easily. Most daily newspapers publish the NAV prices of the unit trust funds.  In order to calculate the value of your investment, multiply the number of units you own by the NAV price published in the newspaper and divide by 100 (as the NAV prices are calculated and published in cents).  Errors and omissions can occur from time to time and we, therefore, recommend confirming your investment value with us.  This can be done by contacting our unit trust client services team on +27 (21) 426 1313 or by e-mail on utclientservices@elementim.co.za.
    Certain newspapers and financial publications publish unit trust performance tables from time to time.  This allows you to compare the performance of your fund to other funds in the same category.  These tables show you the return made over certain periods, such as a year, three years or five years. 

3. Who should invest in a unit trust?

Unit Trusts are ideally suited to people who do not have the time or knowledge required to select individual shares on stock exchanges themselves, or who have limited capital, but would like the benefits of professional investment management and diversification. 

Different unit trusts suit different investors' financial needs and have different levels of risk. You should invest in a fund that suits your needs and particular circumstances. 

4. What is a redemption?

A redemption is when you wish to sell some or all of your units that you own in a unit trust portfolio. The proceeds are then paid into your nominated bank account. A sale of units is sometimes referred to as a repurchase, as the manager of the Collective Investment Scheme is by law (subject to certain exceptions) obligated to repurchase your units from you at your request.  

5. What is a switch?

A switch is a repurchase out of one unit trust fund and a purchase into another unit trust fund held with the same management company. The repurchase and the purchase occur on the same day. 

6. What is forward pricing?

Forward pricing, which is used throughout the unit trust industry in South Africa, means that your instruction will be valued at the Net Asset Value (NAV) price calculated at the next valuation point. Your purchase or repurchase instructions are therefore processed at prices that are not yet determined when your instructions are received. The Element Unit Trust Funds are valued daily at 15:00 (valuation point) and carry an instruction cut-off time of 14:30. This means that if you send your instructions through before 14:30 on any business day, they will be processed at the NAV price that is calculated at 15:00 that afternoon. Instructions received after 14:30 will be processed at the NAV price determined at 15:00 on the following business day. 

7. How long should I be invested in a unit trust?

Unit Trust investments should be viewed as a long term investment of between at least 3 to 5 years. 

8. How soon are my funds available if I redeem my units?

If we receive and verify your Instruction before 14:30, it will be processed on the same business day and in accordance with the Deed. The proceeds of the sale of units will be deposited into your bank account on the following day and may take up to 48 hours from when your redemption instruction is processed to reflect in your bank account. There may be delays in the banking process, therefore, this cannot be guaranteed.  

9. Are there any guarantees?

A unit trust investment does not provide an investor with any guarantees. Past performance is also no indication of future performance. 

10. How do I Lodge a Complaint?

To lodge a complaint, please view our online Complaints Procedure

 Safety and Security

1. Is my money that I invest in a unit trust safe?

Yes. Unit Trusts are governed by the Collective Investment Schemes Control Act, No 45 of 2002 and regulated by the Financial Services Board (FSB). Independent trustees oversee the unit trust scheme and the assets of the unit trust funds are held in safe custody at a major financial institution for the benefit of the investors in the fund. Unit Trusts are also required to act in accordance with certain guidelines laid out by the Association for Savings and Investment SA.  The assets of the unit trust funds do not form part of the assets of Element Investment Managers.   

2. What is FICA?

South Africa has implemented a law that is designed to combat money laundering, which is the abuse of financial systems in order to hide and/or disguise the proceeds of crime. This law is known as the Financial Intelligence Centre Act 28 of 2001, also referred to as FICA. 

In terms of FICA, all accountable institutions (such as banks and ourselves) have specific duties to help prevent money laundering. One of these duties is to perform a "Know your Client" (KYC) check on all clients. What this means for new and existing investors is that they will need to provide us with proof of:

  • Identity - we will need a copy of your South African green bar-coded ID book.  If you do not possess a green bar-coded ID book, we will need a copy of your passport to verify your identification number and full name;
  • Address - please send a copy of a utility bill to verify your residential address;
  • Copy of correspondence from SARS to verify your income tax number.

Please refer to our FICA requirements document included in the application form.

3. What is Money Laundering?

Money Laundering is the process by which criminals attempt to conceal the true origin and ownership of the proceeds of criminal activities. If successful, the money can lose its criminal identity and appear legitimate.

Illegal arms sales, smuggling, and the activities of organised crime, including for example, drug trafficking and prostitution, can generate huge sums. Embezzlement, insider trading, bribery and computer fraud schemes can also produce large profits and create the incentive to "legitimise" the ill-gotten gains through money laundering. When a criminal activity generates substantial profits, the individual or group involved must find a way to control the funds without attracting attention to the underlying activity or the persons involved. Criminals do this by disguising the sources, changing the form, or moving the funds to a place where they are less likely to attract attention. In summary, the money launderer wants to:-

  • place their money in the financial system, without arousing suspicion;
  • move the money around, often in a series of complex transactions crossing multiple jurisdictions, so it becomes difficult to identify its original source; and
  • then move the money back into the financial and business system, so that it appears as legitimate funds or assets.

4. Will my personal information remain confidential?

We aim to keep all our clients' details and personal information confidential and handle every instruction with complete privacy. 

Transactional information

1. How do I open an account with Element Investment Managers?

We require all new investors to complete an application form.  The application form is available on our website.  Alternatively, if you contact us, we will be able to send an application form to you. Once you have completed and signed the application form in full, you can scan in and e-mail the application form to us or fax it to us, along with your FICA documents, copy of a cancelled cheque and proof of deposit. 

2. Can I open an account for my children or other persons?

Yes - you are able to open a unit trust investment in the name of a minor or another investor. As the guardian / parent, you are required to sign all instruction forms. For accounts in the name of a minor child, you will be required to sign until the minor child reaches the age of 18 years old. When the minor child turns 18 years old, they will need to send their FICA documents to us and sign all further instructions. 

3. What fees do I need to pay?

We do not charge an initial fee. Your full investment amount is therefore invested to purchase units for you. 

If you invest via a financial advisor, the financial advisor may take up to 3.00% (excluding Vat) as an initial upfront fee.  This fee needs to be agreed upfront between you and your financial advisor and indicated on the application form.

We do charge an annual management fee.  This fee is calculated and accrued daily and is included in the daily NAV price of the fund.  You will, therefore, not see a reduction in your units to pay this fee. Please refer to our fund list for the annual management fee charged per fund. 

4. Do I pay a performance fee?

No, we do not charge any performance fees on our Unit Trust Funds.  

5. How are the fees recouped from my investment?

If you invest via a financial advisor, the initial fee is withheld before we invest your money.  You will see on your statement the gross amount to be invested, the initial fee that you agreed to pay your financial advisor and then the net amount to be invested. We pay the initial fee to your financial advisor on your behalf at the end of the month.

The annual management fee is calculated and accrued in the fund on a daily basis. At the end of the month, the amount calculated for the month is paid to us. 

6. How long does it take to execute a transaction?

Subject to us having received a fully completed and signed instruction, along with all the relevant documents and proof of deposit (where applicable), instructions received before 14:30 on any business day will be processed on that day at the NAV price calculated at 15:00 on the same day. Instructions received after the cut-off time of 14:30 will be processed on the following business day at the following day's NAV price.

  • New investments:

New investments will be processed only after we have received your Investment Application Form, all required supporting documentation, and proof of deposit. Provided we have received all the abovementioned requirements before 14:30, your unit trust investment will be processed at the NAV price calculated at 15:00 that afternoon.

  • Redemptions:

Instructions received and verified by us will be processed in accordance with our Deed. The proceeds of the sale of units will be deposited into your bank account on the following day and may take up to 48 hours from when your redemption instruction is processed to reflect in your bank account. There may be delays in the banking process, therefore, this cannot be guaranteed. 

7. What documentation can I expect to receive regarding my investment?

You will receive:

  • Quarterly Statements
  • Quarterly Newsletter
  • Annual Abridged Financial Statements
  • Annual tax certificates - IT3b and IT3c

You are welcome to contact us at any point to request a statement.

8. How often do I receive statements?

Statements are mailed to you on a quarterly basis. 

9. Can I request that the proceeds from redemption be paid to a third party?

No, your funds cannot be paid to a third party. For security reasons, the proceeds of any unit trust redemption (repurchase) will only be paid to your nominated bank account that you indicated in your Investment Application Form. 

10. What are unit trust distributions?

South African tax legislation requires that all South African unit trust funds distribute the net income in the fund (interest and dividends, less expenses) periodically. Income is distributed annually, semi-annually, quarterly or monthly, depending on the type of unit trust fund. Please refer to the fund fact sheets to see when the Element Unit Trust Funds declare distributions. Distributions are paid to investors in proportion to their unit holding. Distributions can either be paid into your bank account or can be reinvested into the fund to buy more units, thereby taking advantage of compounding returns. 

Tax

1. How are unit trusts taxed?

There are two types of tax levied on unit trusts.

The first type of tax is levied on interest income from any source.

Unit trusts earn interest and dividends. At the end of each tax year, Element Investment Managers will issue an IT3(b) certificate to advise you of the total interest and total dividend earned during the tax year. These amounts should then be included on your annual tax return to be submitted to the Receiver of Revenue.

There is a primary rebate in place for "natural persons", which is increased for tax payers over the age of 65.  Please refer to SARS for the latest primary rebates applicable. The balance of this income is taxed by the Receiver of Revenue at the investor's marginal rate of tax.

The second type of tax, Capital Gains Tax (CGT), is levied when investments are sold and a capital gain is made. Investors are obliged to pay CGT at their marginal rate on 25% of the total capital gain to SARS. Trusts and companies are obliged to pay CGT on 50% of the total capital gain to SARS.  

An exclusion rate has been set for natural persons. Please refer to SARS for the latest exclusion rates applicable. 

There are actually four different methods which can be used to calculate a base price. Unit Trusts are obliged to use the Weighted Average Base cost method.

CGT legislation enables investors to decide when they wish to become liable for CGT, allowing them to defer and plan their investments appropriately. Furthermore losses can be offset against gains. Calculations for gains and losses that are made in the tax year are added together to determine an overall gain.

2. Are there CGT implications when I switch between funds?

Yes, there are CGT implications when you switch between funds, as you will be disposing of units in the one fund and purchasing units in another fund.  

3. What is an IT3(b)?

Unit trusts earn interest and dividends. At the end of each tax year, we will issue an IT3(b) certificate to advise you of the total interest and total dividend earned during the tax year. These amounts should then be included on your tax return to be submitted to SARS.  

4.  What is an IT3(c)?

An IT3(c) is a certificate that we will issue at the end of each tax year to indicate the capital gain or loss made on your investment that was sold / disposed of during the tax year.  These amounts should be included on your tax return to be submitted to SARS. If you do not sell any of your units during the tax year, you will not receive an IT3(c) certificate. 

What is a Linked Investment Service Provider? 

A linked investment service provider (Lisp) enables you to invest through one company in a broad range of investments, from listed shares to unit trust funds offered by different management companies across the industry. 

A Lisp is essentially an administrator that packages and distributes a range of investments, and enables investors to access them through different financial products, including tax-incentivised retirement instruments. 

Through a Lisp you can set up and keep track of a portfolio of investments. In most cases, this portfolio is a selection of unit trust funds offered by a range of, but not necessarily all, management companies. 

The portfolio may also be the underlying investments of an endowment policy, a retirement annuity, a preservation fund, an investment-linked living annuity or an income-generating product using after-tax discretionary savings or the proceeds of a provident fund.  

Most Lisps require you to invest with them through a financial advisor, but you can invest in some Lisps directly. 

If you want to find out which Lisps allow direct investments, you should contact the Association for Savings & Investment SA (ASISA).

There are two types of Lisps: discretionary Lisps and non-discretionary Lisps. 

Discretionary Lisps, which are less common, can take and implement investment decisions on your behalf. Non-discretionary Lisps simply provide you with facilities for buying, managing and switching your investments, without getting involved in any decision-making. 

Both types of Lisps have to be able to reconcile your buy and sell instructions with the investments they hold on your behalf. 

 Financial Services Providers or IFA's

1. To find an advisor, you can visit www.fpi.co.za.

2. Find out about your financial advisor

Are they registered with the Financial Services Board (FSB)?  All people who wish to offer financial advice need to register as a Financial Services Provider (FSP) with the FSB.  They are obligated to display their FSP certificate in their reception area.

3. IFA Registration

A Financial Services Provider registration form must be completed and signed. It is available for download on our website. This form, together with the required supporting documentation can be faxed or e-mailed to our offices.

4. Do you pay a trail commission?

We pay a trail commission of 0.25%, plus Vat, is paid to the financial advisors from our annual management fee. Trail commission does not impact your investment.

5. What about VAT?

VAT is payable on all initial fees and is also levied against a client's investment. Vat is also payable on the annual management fees.

 
 

WE WERE THE FIRST SOUTH AFRICAN INVESTMENT MANAGER TO SIGN THE UNITED NATIONS PRINCIPLES FOR RESPONSIBLE INVESTMENT

WE ARE COMMITTED TO THE CODE FOR RESPONSIBLE INVESTING IN SOUTH AFRICA