Spreading your risk with FNB Shares Zero
As long-term investors, we are looking to consistently outperform the increased cost of living and build up a nest egg over our working lives that will sustain us into retirement. A tried and tested long-term investment strategy is building a portfolio with multiple asset classes that align to your investment goal, and then giving those assets enough time to perform by staying the course.
The more we invest, the larger the capital balance and the higher the potential return. Investment fees and costs mean there is less capital to invest and grow over time. Any reduction in fees means a higher capital balance to invest. Over the long term, a reduction in fees can mean achieving investment goals faster. That is why FNB has introduced the Shares Zero Account so as much of your wealth as possible is invested and growing.
Introducing FNB Shares Zero:
Shares Zero allows you as an investor to gain exposure to top listed local and global companies through the JSE Top 40 shares, exchange-traded funds (ETFs) and exchange-traded notes (ETNs), without paying a monthly account fee. When you purchase any of the listed FNB or Ashburton ETNs or ETFs you will pay zero brokerage fees when buying any of these instruments, meaning you have more money to invest. As part of the ETN range, you also get exposure to the biggest global companies with FNB ETNs that track Alphabet, Amazon, Apple, Coca-Cola, Facebook, McDonald's, Netflix, Tesla and Visa just to name a few.
What do these different asset classes offer you as an investor?
The JSE Top 40 shares: The JSE Top 40 are the 40 largest companies on the JSE by market capitalisation. These are what is known as blue-chip companies due to their size, track record and profitability. Investing in the Top 40 shares means investing in stable, well-known companies with strong management and reputation, giving investors a combination of dividend income as well as potential capital appreciation. Naspers, Prosus, Anglo American and Shoprite are some of the big names that form part of the JSE Top 40. With a Shares Zero Account, investors can decide which of the top 40 companies form part of their investment strategy, and with zero monthly account fees, more shares can be acquired over the long term.
Exchange-traded funds (ETFs): An ETF, or an exchange-traded fund, is an index-tracking investment tool that is traded in a public market. ETFs comprise of a basket of assets meaning multi-asset exposure through a single investment. In other words, it's an equity fund but the basket is listed and traded on the stock market. ETFs typically focus on a segment of the market, such as technology, energy, real estate or on a geographical location such as Japan, the US, or emerging markets. ETFs follow these indices to track the market's volatility. ETFs are traded on the stock exchange just like a share, meaning you can buy and sell an ETF like you would a company share. ETFs can be a fantastic beginner tool for those investors looking to gain access to the market in a diversified manner but can also be used by the most experienced of investors looking to further diversify risk through basket inclusion. Investors can gain exposure to any listed ETF on the JSE and any FNB or Ashburton ETF will carry zero brokerage costs when buying these assets.
Exchange-traded notes (ETNs): An ETN is a type of debt security issued by a financial institution like FNB. An ETN tracks an underlying index, for example, offshore companies like Amazon, Tesla and Apple to name a few, and trades on the stock exchange. An ETN is like a bond; however, instead of receiving regular interest income in the form of coupon payments, an ETN's price fluctuates based on the underlying index or company performance. This means that if an Amazon ETF is purchased, the ETN will increase or decrease in price based on Amazon's performance - just like the listed Amazon share in the US. As an investor, you do not physically own these international shares, but rather obtain exposure to the company's performance based on the fluctuating ETN price. ETNs offer investors geographical diversification without taking rands offshore. Investors can decide to purchase individual ETNs that track a specific company's performance like Netflix or buy a basket of assets like the FNB Global Growth Equity ETN that offers investors exposure to multiple companies that are selected and managed by a professional fund manager. Keep in mind that any FNB ETN will carry zero brokerage when acquired through a Shares Zero Account, meaning you can buy more ETNs over the long term.
In closing
The new FNB Shares Zero Account will allow investors to invest more of their capital into the market. The combination of JSE Top 40 shares, ETFs as well as ETNs means investors can spread risk through diversifying across different company sectors, sizes, stages of business, geographical locations and fund mandates. Invest for less and open your FNB Shares Zero Account today.
