Following a successful six-month pilot in four Western Cape stores, Woolworths Financial Services will roll-out its unit trust on a national basis to 100 stores.
According to Deon de Kock, director of Woolworths Financial Services, the product has attracted just over 1 400 unit-holders with average debit orders of R175 and average lump sum amounts of R2 600.
"We are quite satisfied with this result for the pilot period, particularly as we undertook a very limited marketing campaign during the period. In addition, 20% of our unit-holders are from Gauteng and KwaZulu-Natal, indicating national interest in the complete absence of a national marketing campaign."
The national roll-out, commencing 10 April, will be supported by intensive in-store marketing as well as a newspaper and magazine advertising campaign, and direct mail campaigns.
"Our objective with the Woolworths Unit Trust is to make life easier for our customers by giving them accessibility, convenience and customer service in keeping with our core brand values," says De Kock.
Woolworths is the only retailer to date to launch a unit trust fund. The product extends Woolworths` entry into the financial services arena after the successful launch of its Personal Loan product during May last year.
The Woolworths Unit Trust was developed in association with Nedcor Investment Bank (NIB) and is asset managed and administered by the investment bank. The venture reflects a core NIB strategy of diversifying its distribution channels through strategic alliances.
The Woolworths Unit Trust is structured to maximise returns while minimising risk. It combines both indexing and judgmental asset management techniques as well as an asset allocation component that enables the fund manager to reduce risk.
The fund comprises a "core" portion and a "kicker" portion. Approximately 80% of the fund, the "core" portion, tracks the general equity unit trust industry. It will hold around 150 South African shares and will also include foreign exposure. The aim of the core portion is to match the performance of the average general equity fund by replicating the average investment position adopted by all the funds listed in the general equity category. This is done systematically, by means of an optimisation programme that analyses the portfolio of each unit trust fund listed in the general equity category.
A "judgmental" portion of approximately 20%, depending on the cash holding, will aim to leverage above-average performance by targeting selected stock and asset classes. The purpose of this "kicker" portion is to add performance over and above the tracker portion. This portion is not restricted to equities.
The fund manager is Stephen Roberts, who has 15 years of investment experience and also manages the NIB Lifetime Wealth Creator Fund.
In keeping with Woolworths` policy of providing quality merchandise at reasonable prices, the Woolworths Unit Trust has been priced affordably. The minimum debit order is R125 per month, and the minimum lump sum investment is R500. The initial fee has been reduced to 3.14%. The compulsory charge of 0.65% for Marketable Securities Tax will apply, and an annual service fee of 1.25% will be levied.
All investments are handled by the Woolworths Call Centre.
"The launch of the Woolworths Unit Trust is based on an identified need from our customers to offer a select range of innovative financial products providing quality, value for money and peace of mind," says De Kock. "The national roll-out of the unit trust marks the next phase of our journey into the financial services arena."
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