1. What type of products does Oasis have? 

 

Oasis has two types of products that are marketed to retail investors:

 

• Collective investment schemes (or unit trusts) of various risk profiles.

• Retirement products, consisting of a retirement annuity fund, a preservation pension fund, a preservation provident fund and a conventional retirement fund for companies that manage employer and employee contributions.  

 
2. How safe is my money with Oasis? 

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Oasis has taken stringent measures to ensure that the schemes that the company has established provide the highest levels of security.

Although the legislation in each of the regions in which Oasis operates differs, we would usually seek to establish a fund where the assets are held within a trust that has an independent board of trustees that usually take the form of large financial institutions. In South Africa we have appointed Standard Bank as our trustee.

The investments of the fund are then registered in the name of the respective scheme, and not in any of the Oasis companies. These assets are held by an independent custodian that is responsible for keeping all the securities in safe custody. The custodian needs to be duly authorised to perform this function and as such, Oasis cannot be the custodian.

By segregating the above responsibilities the institutional risk to investors has been limited. The remaining risks that pertain to unit trust investments largely reflect the investment risk, which we try to limit with our investment philosophy of providing "Superior returns at lower than market risk"TM.

3. What is a unit trust?

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A unit trust is a collective investment that enables you to pool your money with other investors who have similar investment objectives. Experienced investment managers invest this pool of money in different assets in financial markets. This includes a wide range of local and international shares or equities (companies listed on a stock exchange), bonds, property, money market instruments and their derivatives.
 
The total value of the pool of invested money is split into equal portions called participatory interests of units. When you invest in unit trusts, you buy a share of the units of the total fund. The unit price (also known as the net asset value (NAV)) is dependent on the market value of the instruments in which the pool of money is invested and therefore rises and falls. It is calculated daily.
 
There is a wide range of collective investment funds offered in South Africa. These are both rand and foreign currency based, catering for a myriad of investor needs. This includes funds that generate income to those that offer capital growth in the medium to long term (three to five years and longer). Units should be held for these periods to reap the full benefit of the investment and to minimise the effects of any market ups and downs.
 
Collective investments such as unit trusts are the most accessible, flexible, protected, regulated and transparent long-term savings vehicles. 

 

4. Why invest in unit trusts?

Unit trusts have a range of benefits: 
 

• They reduce investment risk 

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Unit trusts invest in a range of underlying assets. This means that all your eggs are not in one basket. Your risk is spread amongst many assets, rather than amongst one or only a few. If any assets perform poorly, your overall investment won't necessarily perform poorly as there are other assets that may have done very well.
 

• They are easy and accessible 

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Unit trusts are a very convenient way of investing in markets which you otherwise would find difficult to access. Although the minimum investment amounts differs in each region, you can invest in them in South Africa with as little as R500 per month (monthly debit order) or a R2000 lump sum.
 

• They offer good returns 

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History has shown that average unit trust returns compare very favourably with returns from more traditional investment products. The longer you leave your money invested in most unit trusts, the greater the opportunity for growth.
 

• They benefit from expert decision-making 

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Unit trusts are managed by highly qualified investment managers, whose full-time job it is to make investment decisions. Few people have the necessary time, skills or experience to actively manage their own investments on a day-to-day basis.
 

• They offer value for money 

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Unit trusts are designed to give you good value. The pooling of money increases buying power, enabling investment managers to buy assets the small investor normally cannot afford. Fees are competitive and clearly set out. They comprise an annual management fee of 1-2% (excl. VAT) of the fund's market value and an initial fee up to a maximum of 3% (excl. VAT) of your investment. These usually decrease on a sliding scale for larger investments. The initial fee is deducted from the amount invested before units are purchased at the NAV price and the annual management fee is deducted before income distributions are declared. Unit trust fees are deregulated and investors should familiarise themselves with all fees applicable to any investment as these may differ from fund to fund.
 

• You always know how much you own 

 

The NAV prices of units are quoted daily in the national press and can also be obtained directly from the unit trust company. You can calculate the value of your investment at any time by multiplying the number of units you own by the NAV price of your fund.
 

• Your investments are protected 

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Your money is held separately from the managing company's assets in a trust. If anything goes wrong with the company, your money is safe. The local industry is also strictly regulated by the Registrar of Collective Investment Schemes, the Association of Collective Investments and each unit trust company's trustees to protect your investment. Similar institutions, such as the Irish Financial Services Regulatory Authority, perform comparable functions in their respective jurisdictions. A vigilant financial press and analysts who continuously monitor the performance of the industry also protect you. In addition, you receive optional quarterly reports and an annual report listing all the assets in which your unit trust invests.
 

• They offer flexible investment options 

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You can either invest a lump sum amount so that your entire investment immediately benefits from the growth and income potential of the chosen unit trust. Or you can make a regular monthly investment, an easier way of building up capital. The latter smoothes your investment into the market over time (this is called rand cost averaging), rather than being affected by a market movement at a particular time. Unit trusts are also transferable and you can invest in somebody else's name.
 

• They are easy to access, buy and sell  

 

Unit trusts are liquid so you can cash in all or part of your investment at any time and have ready access to your money, within 3-4 business days.   

 

5. What are the tax implications of investing in unit trust?

 

 

• Income Tax  

 
The income tax legislation for each country often differs significantly. Therefore, you should consult your local tax advisor to ascertain the income tax permutations that pertain to your prospective investment.

 

In South Africa, all dividends earned in a South African registered fund are exempt from income tax under Section 10(1)(i)(xv) & (xvi) of the Income Tax Act No 58. of 1962. A portion of all interest earned is exempt from income tax under section 10(1)(i) of the Income Tax Act. An amount of R18 000, if the client is under the age of 65, and R26 000, if he or she is 65 years and over, is exempt. Remember that this deduction takes all interest earned across all investments and savings into account: it does not only apply to the client’s collective investment scheme/s.
 

• Capital Gains Tax  

 
Capital Gains taxation is applied to individuals from different countries in different ways. Therefore, you should consult your local tax advisor to ascertain the capital gain taxation that may pertain to your prospective investment.

 

In South Africa, Capital Gains Tax came into effect from 01 October 2001. The proceeds from the sale of unit trusts is taxed in the hands of the investor at his or her marginal tax rate. Remember that only 33.3% of the gain is taxable and there is an exemption of R30 000 if the investment was made by a natural person. If, however, the investment was made by a trust or company, 50% of the gain is taxed at a rate of 40% for a trust and 29% for a company.

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Compared to other investment vehicles, unit trusts are tax-efficient in terms of Capital Gains Tax (CGT). Unit trust investors only incur CGT when they sell their units in a unit trust. This allows investors to defer tax and to plan their investments appropriately. Secondly, the applicable CGT rate can be as low as 4.5%, depending on the investor's marginal tax rate, or as high as 10.5%, which is on par with shares. Relief measures such as the R30 000 exemption and the offsetting of losses against gains can also be used. 

6. What are the withdrawal and tax implications of investing in a retirement annuity?

 

• Retirement annuities

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In South Africa it is permissible to contribute to one or more retirement annuities but only a certain amount will be allowed as a deduction. The Income Tax Act provides that the greater of the following amounts may be claimed as a deduction:

 

• R1 750;

• R3 500 less any pension fund contributions; or

• 15% of non-retirement funding income.

 

A salaried employee who does not earn any other income, for example, rental income and income from investments, including interest and dividends, will only be allowed to claim R1 750. A self-employed person who does not belong to a pension or provident fund will be able to deduct 15% of his income. A salaried employee who belongs to a pension or provident fund may also qualify for the deduction of 15% of non-retirement funding income if he earns a high bonus that was not included in his retirement-funding income.

This may seem complicated but, in fact, it is simple – just keep in mind the income used to calculate the pension or provident fund contributions and the balance may be used in the calculation for non-retirement funding income. 
 

• Withdrawal from retirement funds  

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It is important to contemplate the factors that influence retirement funds on retirement. Retirement from an approved retirement fund is only permitted at the age of 55. If funds are withdrawn before retirement, they do not qualify for the special tax exemption available on retirement. Withdrawal from a retirement annuity is not permitted before the age of 55, whereas the total benefit due may be withdrawn from a pension or provident fund at any time.

 

• Withdrawal before retirement
   

Fund:  Pension fund

Withdrawal Yes/No:  Yes

Tax implications:  The greater of R1 800 or any contributions made in respect of which no deduction was received is tax-free on withdrawal. For example, where an amount in excess of the tax deductible 7,5% is contributed, the difference between the actual contribution and 7,5% thereof is tax-free at withdrawal. The amount of the withdrawal in excess of this deduction is taxed at the higher of the current and previous year’s average tax rate.

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Fund:  Provident fund

Withdrawal Yes/No:  Yes

Tax implications:  The greater of R1 800 or any contributions made where no deduction was received on contributions made to the provident fund will be taxed at the higher of the current and previous year’s average tax rate.

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Fund:  Retirement annuity fund

Withdrawal Yes/No:  No

Tax implications:  You are able to access the RA pre-retirement if the amount is below R7000 or the client will be immigrating (supporting documents will be requested from the administrator).

 
 

• Withdrawal on retirement 

 

There are certain limitations on withdrawal from a pension or provident fund at retirement. The full benefit due from the provident fund may be taken in cash, whereas only 1/3 of the benefit due from a pension fund or a retirement annuity may be taken in cash as a lump sum. The other 2/3 of this benefit must be used to purchase a life annuity to provide an income for life.

7. When investing in unit trusts or any of the retirement products, is my initial capital guaranteed?  

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No. Any product where money is guaranteed is usually invested in an interest-bearing investment which is not Shari’ah compliant. In those insurance-backed guaranteed policies, one pays for those guarantees, which could be very expensive. Effectively one pays a premium to receive less! 

8. What is the time period one should consider for investing money in unit trust funds?

 

Unit trust products require a medium to long term investment period. The recommended time period is 3 to 5 years or longer.

9. Can I access my money if I invest in a unit trust fund?

 

Funds in unit trusts are not tied up for a predetermined time period other than the recommended time period above. If at any stage you require to draw part or all of your funds, you can do so by completing a redemption form. Note that in the case of a debit order or lump sums invested for less than 40 days, the funds first need to clear before payment can be made. 

10. Can I access my money if I invest in a retirement annuity or preservation pension/provident fund?

 

The South African Pension Funds Act restricts withdrawal from a retirement annuity before the retirement age of 55 years. In the case of a preservation pension/provident fund you are allowed to make one withdrawal before you reach 55 years of age of any amount. Note that this withdrawal is fully taxable. Also when making the allowed 1/3 lump sum withdrawal upon retirement on all of the abovementioned products, the withdrawal will attract tax. 

11. How long does it take for funds to be paid in the event that I decide to redeem all or part of my unit trust investment? 

 

The time taken for an individual's investment to be paid into his bank account is dependent upon the region in which the investment is made. In South Africa the process usually takes +/- 6 weeks, provided that all the FICA requirements have been met. Money is transferred electronically to the clients bank account. Note that no cheques or cash may be issued. 

12. Who is Oasis’s Shari’ah Advisory Board?

 

Please refer to the website link for the Shari’ah advisory board.

 

13. Can one have a joint account, for example with my spouse, and can both or either of us be signatories on this account?  

 

One can indeed have a joint account and both signatories or either of the signatories may transact on the account, depending on what the initial instructions by both parties were. 

14. Does Oasis pay the zakah on my investment?  

 

No, Oasis does not pay the zakah on the investment. The client is responsible for doing this.

15. If I die, will my spouse/children receive the money in my unit trust?

 

The funds would be paid into your Estate after your death. Please ensure that you have an updated will.

16. Can I nominate a beneficiary for my unit trust investment?   

 

No, you cannot. On your death, the executor of your estate will advise Oasis of your death. The executor of your Estate will instruct Oasis how to deal with your investments. The options would be either to transfer the funds to your beneficiaries or pay it into the Estate’s bank account. 

17. I belong to a pension/provident fund at work: how can I ensure  my money is invested in a Shari’ah compliant way?

 

You must either enquire from the Administrators of the fund, the Asset Consultants or one of the trustees. Talk to us at Oasis, and we will try to be of assistance to you. 

18. What are the minimum debit order and lump sum contributions in the Unit Trust funds?

 

The minimum investment amounts differ for each of the regions. In South Africa the debit order contribution is R500.00 per month, with an annual escalation applying to all debit orders under R500.00 of 15% per annum. The minimum initial lump sum contribution is an amount of R2, 000.00. 

19. Is the debit order amount flexible in terms of stopping the contribution in the event of the client being unemployed?

 

You can stop, reinstate, increase and decrease the debit order with a written signed instruction sent to our Administration Department. 

20. What are the minimum debit order and lump sum contributions in the retirement funds?

 

Lump sum contributions for the retirement annuity and preservation funds are R500.00 once off. The retirement annuity debit order minimum is R350.00 with an annual escalation applying to all debit orders under R500.00 of 15% per annum. The preservation funds do not have debit order options.