Investment Data Services (IDS), a new Cape-based unit trust administration company, is set to go to market next month after implementing the Enrich investment administration system supplied by JSE Securities Exchange-listed Global Technology.
IDS has set itself apart in the market by providing access to overseas unit trusts without the prohibitive costs that until now have been synonymous with foreign investment. In so doing, it has broken through the barriers that prevented the average person from investing offshore. Using Enrich, IDS has set up administration facilities that allow financial houses such as Prudential M&G, Franklin Templeton NIB, Barclays, Sarasin and Coronation to offer through their distribution channels monthly debit orders for as little as R1 000 per month.
"Until now the man in the street has had little access to foreign investments at an affordable cost," says Ian Hamilton, CEO of IDS. "Buying foreign currency monthly as an individual is an administrative nightmare; the costs involved in investing it in an overseas fund were prohibitive; and foreign unit trusts tend to only be interested in large sums - all factors that precluded everyone but the wealthy South African investor."
The investing public, regardless of financial status, is keen to diversify risk and gain rand-hedge benefits by investing internationally, says Hamilton. Until now the only affordable overseas unit trusts have been rand-denominated offshore funds, most of which have reached maximum capacity and are closed to new investments.
"The other option has been to use the R750 000 once-off foreign investment allowance. Small investment amounts are balked at by financial houses, which typically require larger investment sums before they express interest," he says.
IDS`s solution is based on the principle that a straight investment into a foreign collective investment scheme offers the best value for money. A fully automated process enables the individual investor to reap the benefits of forming part of one large sum of money invested every month.
"On a monthly basis an investor selects from the range of funds offered on our system, signs a contract with the respective investment house, and grants us power of attorney to conduct the foreign exchange transaction on their behalf in the form of a monthly debit order. We then do a single debit order run once a month so as to gain the benefit of one substantial lump sum, which not only awards us the best rate of the day, but is charged as a single transaction by the bank. All these benefits are passed on to the client," Hamilton says.
The Enrich suite of financial administrative software is the engine behind IDS`s effective investment strategy. Enrich consists of a core investment engine and modules for employee benefits, unit trusts and linked investments that will fulfil the need for a functionally rich, locally developed and supported investment software solution.
"Enrich has the flexibility to be modified and customised to suit specific administrative requirements," says Andrew Stekhoven, regional executive of Global Technology Cape. "It has enabled IDS to fill the gap in the range of offshore investment opportunities available."
While IDS is using Enrich solely for the administration of unit trusts, the suite can automatically facilitate premium raising, receipting, and reconciliation and allocation to assurers, brokers and investment managers. It also offers integrated quotation, claims and payment management, catering for the production of manual and electronic payment types.
"We`re pioneering the way in SA to make overseas unit trusts accessible and affordable," concludes Hamilton.
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