When one considers the preferential tax treatment of dividend income and capital gains, it is clear that investment strategies focused on maximising dividend income and/or capital gains are attractive and could outperform investment strategies focused on maximising interest or rental income.

These funds are aimed at high net worth discretionary investors and companies. Discretionary investments are investments made in addition to investors’ pensions, provident or annuity investments. Discretionary investors aim to maximise their total after tax returns as tax can erode up to 40% of investment returns. Therefore, investments should not be evaluated on a pre-tax basis. The value of discretionary investments in the South African unit trust industry has steadily grown over the past decade and amounted to R342bn as at 30 September 2010. (more…)