FundsNet, an Internet-based investment platform backed by Old Mutual, will be launched on 1 November.
The electronic investment platform has been modeled after international investment sites Schwab and Fidelity, and will provide access to a range of unit trusts from various South African asset managers, at what its proponents say are the lowest fees in the market.
The site has been in development for about a year, and Old Mutual executive GM, Pieter van Niekerk, says the aim is to radically change the way South Africans invest their money.
Users of FundsNet will be able to buy, sell or switch units in a secure environment and access their account details and transaction history at any time. Investment guidelines, investor profiling and fund screening tools will assist with portfolio construction and fund selection, and a financial planning service from certified advisers will be available to investors requiring advice.
The initial offering includes over 180 unit trusts from Old Mutual, Investec, Sanlam, Coronation, ABSA, Standard Bank, Liberty, RMB, NIB and Fedsure. FundsNet intends to expand the range of rand-based unit trusts in the short-term.
Managed portfolios by Old Mutual Asset Managers, OptiVestPlexus and Edge will be introduced before year-end. Plans for 2001 include offshore funds from international asset managers, especially American houses not currently represented in SA.
Also part of the launch offer is an interest-bearing cash management account, which affords investors and advisers greater control and convenience in managing their money on the FundsNet platform. A linked debit card with ATM access is to be launched soon.
"Web-based investment platforms, also referred to as fund supermarkets, are growing strongly in the US and, more recently, in Europe. The South African unit trust value chain is long and awareness of cost is growing. FundsNet intends to improve the way South Africans invest, moving to a new approach that is more cost-efficient, flexible and transparent than anything currently available.
"FundsNet brings substantial savings, translating into better returns. This is by far the most cost-efficient way to invest more than R50 000 in unit trusts," Van Niekerk said.
This cost efficiency is ascribed to the system`s fully automated administration processes, which translate into lower administration fees in the market. Van Niekerk says the paperless registration and investment system is a first in SA.
As part of the FundsNet current offering, no annual fees are charged to investors, but the unit trust management companies whose funds are sold through FundsNet pay for the service by way of rebates to FundsNet. The business is run on Old Mutual Unit Trusts` systems, affording low processing cost.
FundsNet executive director, Roger Horrocks, comments. "The service incorporates a wide array of relevant market data, investment guidelines, portfolio construction and fund selection tools for advisers and investors financial planning service from certified advisers will soon be available for investors requiring advice."
Horrocks points out that while investors who choose to make their own decisions will not pay for advice, research indicates that most South Africans using FundsNet will choose to do so in co-operation with their trusted adviser or financial planner. "FundsNet offers an efficient platform for advisers to work with their clients. Advisers were involved in designing the platform and business model, and we have received enthusiastic support.
"The system removes the hassle for advisers - especially record-keeping related to capital gains tax soon to be introduced. Advisers have free access to FundsNet market reports, fund information and third-party research."
"Next year will see facilitated fee payment to advisers and the launch of AdviserNet, a service that will connect qualified advisers and clients seeking advice.
"With the FundsNet core functionality up and running from 1 November, we`ll roll out the debit card within months. Dollar and sterling-based funds and living annuities will be added next year, as well as share trading."
FundsNet is described as the next step in Old Mutual`s e-business offerings. The financial services group has announced its intention to take the platform, which it views as internationally portable, overseas in the medium-term.
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