Quick Facts

• ETFs typically cost 0.2% to 0.5% per year in South Africa
• Unit Trusts usually cost 1% to 2% per year
• Both can be invested in Tax-Free Savings Accounts (R36,000 per year limit)
• ETFs trade on JSE throughout the day like shares
• Unit Trusts price once per day after market close

Understanding Your Investment Options

Both ETFs and mutual funds help you invest in many companies at once. This spreads your risk. You don’t need to pick individual shares yourself. Instead, your money goes into a basket of different investments.

In South Africa, mutual funds are called Unit Trusts. Both ETFs and Unit Trusts are regulated by the Financial Sector Conduct Authority (FSCA). This means they follow strict rules to protect your money.

The big question is: which one is better for you? This guide explains everything in simple terms so you can make the right choice.

1. What Are ETFs and Unit Trusts?

What is an ETF?

ETF stands for Exchange Traded Fund. Think of it like a basket of shares. You can buy and sell this basket on the JSE (Johannesburg Stock Exchange) throughout the day. The price changes minute by minute, just like company shares.

Simple example: The Satrix Top 40 ETF holds shares in the 40 biggest companies on the JSE. When you buy this ETF, you own a tiny piece of all 40 companies.

What is a Unit Trust?

A Unit Trust is also called a Mutual Fund in other countries. Your money goes into a pool with other investors’ money. A professional fund manager decides which shares or bonds to buy.

Unit Trusts are priced once per day after the market closes. You can’t buy or sell them during the day like ETFs.

Simple example: The Allan Gray Balanced Fund is a Unit Trust. The fund manager actively picks which companies to invest in. They try to beat the market average.

2. Key Differences Explained

Feature	ETFs	Unit Trusts
Trading	Trade on JSE all day like shares	Price set once per day after market close
Typical Fees	0.2% to 0.5% per year	1% to 2% per year
Management Style	Usually passive (follows an index)	Usually active (manager picks stocks)
Minimum Investment	No minimum on platforms like EasyEquities	Sometimes R500+ minimum monthly
Transparency	Holdings disclosed daily	Holdings disclosed quarterly
Where to Buy	JSE stockbroking account needed	Direct from fund manager or platform

✅ 3. Fees and Costs Comparison

Fees matter a lot over time. Lower fees mean more money stays in your pocket. Let’s look at real examples from 2025:

ETF Fees (Examples from South Africa)

• Satrix Top 40 ETF: 0.10% per year
• Satrix MSCI World ETF: 0.25% per year
• CoreShares S&P 500: 0.15% per year
• Sygnia Itrix S&P 500: 0.13% per year

Unit Trust Fees (Typical Ranges)

• Domestic equity funds: 1.0% to 1.8% per year
• Offshore equity funds: 1.2% to 2.0% per year
• Balanced funds: 1.0% to 1.5% per year
• Some funds charge extra performance fees on top

Platform Fees (2025)

• EasyEquities: 0.25% per year for Unit Trusts, no fee for ETFs
• SatrixNOW: 0.25% per year for Unit Trusts, no fee for ETFs
• Some banks charge 0.5% to 1% platform fees

4. How Trading Works

Buying and Selling ETFs

ETFs trade on the JSE like company shares. You need a stockbroking account. Here’s how it works:

1. Market opens at 09:00 and closes at 17:00 on weekdays
2. You can buy or sell anytime during these hours
3. The price changes throughout the day based on demand
4. Your trade settles in 3 business days
5. You see the exact price when you buy

Buying and Selling Unit Trusts

Unit Trusts work differently. You can’t trade them on the JSE:

1. You place an order anytime during the day
2. The price is calculated once after the market closes
3. You don’t know the exact price until later
4. Your order processes at that end-of-day price
5. Money typically reflects in 3 to 5 business days

5. Tax-Free Savings Accounts (TFSAs)

Both ETFs and Unit Trusts can be held in a TFSA. This is very important for South African investors.

TFSA Rules for 2025

• Annual limit: R36,000 per tax year (March to February)
• Lifetime limit: R500,000 total per person
• Tax benefit: No tax on interest, dividends, or capital gains
• Penalty for exceeding: 40% tax on the excess amount
• Withdrawals: You can take money out anytime, but you lose that contribution space forever

Which is Better in a TFSA?

The tax benefit is the same for both ETFs and Unit Trusts in a TFSA. However, lower fees matter even more in a TFSA because you’re saving for the long term.

6. Which Should You Choose?

Choose ETFs If:

• You want the lowest possible fees
• You’re happy to track the market average (not try to beat it)
• You want to see exactly what you own every day
• You have a small amount to start with (even R50)
• You’re investing for 5+ years
• You prefer a simple, hands-off approach

Choose Unit Trusts If:

• You believe a skilled fund manager can beat the market
• You want someone actively managing your investment
• You prefer the simplicity of one price per day
• You want access to specialized strategies
• You’re willing to pay higher fees for potential better returns
• You already have a relationship with a financial adviser who recommends specific funds

Can You Use Both?

Yes! Many investors use both. For example:

• Core holdings (80%): Low-cost ETFs for broad market exposure
• Satellite holdings (20%): Select Unit Trusts for specific strategies

This gives you low fees on most of your money while allowing some active management.

7. Where to Invest in South Africa (2025)

Popular Investment Platforms

🚨 8. Investment Scams to Avoid

South Africa has seen major investment scams in recent years. Millions of rand have been stolen. Protect yourself by knowing the warning signs.

Recent Major Scams (2024-2025)

• BHI Trust: R3 billion Ponzi scheme promising 10% weekly returns
• Africrypt: R54 billion cryptocurrency scam
• Telegram Investment Groups: Fake schemes impersonating legitimate companies
• United African Stokvel: Over 600 investors lost savings
• Tiger Agriculture/Farm Home Stead: Pyramid schemes promising 257% monthly returns

Red Flags – Never Invest If You See These:

• Guaranteed high returns (above 15% per year is suspicious)
• Pressure to invest quickly or “miss the opportunity”
• Promises to double your money in days or weeks
• No FSP number or fake FSP number
• Contacted via WhatsApp, Telegram, or social media
• Celebrity endorsements or fake testimonials
• Requests to pay in cryptocurrency only
• Can’t find the company on the FSCA website
• Vague explanations of how they make money
• Pyramid structure (earn by recruiting others)

How to Verify a Legitimate Investment

1. Check if they’re registered on www.fsca.co.za
2. Verify their FSP number on the FSCA website
3. Look for them on the JSE website if they claim to be listed
4. Read independent reviews from trusted sources
5. Ask questions – legitimate companies welcome questions
6. Never invest money you can’t afford to lose
7. Get advice from an independent financial adviser

What to Do If You’re Scammed

• Report immediately to FSCA: 0800 110 443
• Report to SAPS Commercial Crimes unit
• Contact your bank to try stopping payments
• Tell friends and family to avoid the same scam
• Keep all documents and communications as evidence

Your Consumer Rights

As a South African investor, you have legal protections. Both ETFs and Unit Trusts are regulated by:

Key Regulations

• Collective Investment Schemes Control Act (CISCA): Governs both ETFs and Unit Trusts
• Financial Advisory and Intermediary Services Act (FAIS): Protects you from bad advice
• Consumer Protection Act: Gives you rights as an investor
• POPI Act: Protects your personal information

Important Contact Numbers

Organisation	Contact	Purpose
FSCA	0800 110 443 www.fsca.co.za	Report scams, verify FSP numbers
FAIS Ombud	0860 324 766 www.faisombud.co.za	Complaints about financial advisers
JSE	011 520 7000 www.jse.co.za	Questions about JSE-listed investments
National Consumer Commission	0860 003 600 www.thencc.gov.za	General consumer complaints

For Most Investors

Start with low-cost ETFs. They give you excellent returns for minimal fees. Use a platform like EasyEquities or SatrixNOW to keep costs low.

Use Your TFSA

Invest the full R36,000 annual limit in your TFSA. This is one of the best tax benefits available to South Africans. The tax savings over 20+ years are enormous.

Simple Portfolio Example

• 60% in Satrix Top 40 or Satrix 40 (South African shares)
• 30% in Satrix MSCI World or Sygnia S&P 500 (Global shares)
• 10% in Satrix Property or cash for emergencies

Stay Safe

Only invest through FSCA-regulated platforms. Verify FSP numbers. Never trust promises of guaranteed high returns. If someone approaches you on WhatsApp or Telegram with an investment opportunity, it’s almost certainly a scam.