ON THE MONEY
STUART THEOBALD: ETFs are great but the free ride will eventually catch up with the market
I like to invest in exchange-traded funds (ETFs). The fees are cheaper than actively managed funds, and they are convenient and give you access to well-diversified portfolios. They are also available within tax-free savings accounts you can open with stockbrokers, giving you the only way possible to avoid every tax levied on trading in equities. You get global exposure without exchange control hassle. It is a no-brainer, even in taxable accounts. But that doesn’t mean ETFs are good in every sense. And as their popularity grows worldwide, I expect we will come to recognise this more clearly. This month, according to data from consultancy ETFGI, worldwide ETF assets reached R60-trillion after R1.2-trillion of additional inflows in January 2018 alone. It is nearly impossible to calculate what proportion of global investment that represents, because funds can now hold a bewildering variety of assets, including synthetic instruments and commodities. According to investment advisers Willi...
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