ITRIX: THE OFFSHORE ‘HOLY GRAIL'?

A cheap offshore investment scheme that legally bypasses exchange controls JULIUS COBBET

ITRIX PROVIDES South African investors with an ultra-cheap entry into Europe’s blue-chip shares. It is popular, too, for its ability to bypass exchange controls—retail investors may place as much money as they like into Itrix.

Launched on 19 September 2005, Itrix is the JSE’s newest exchange-traded fund (ETF). An ETF is simply a fund that provides investors with a cheap entry into a basket of shares, typically an index.

A joint initiative between the JSE and Deutsche Bank, Itrix offers investors exposure to two indices: the FTSE 100, and the Dow Jones Euro Stoxx 50.

The FTSE 100 tracks the 100 biggest companies on the London Stock Exchange, including heavyweights like Royal Dutch Shell, Barclays Bank, Rio Tinto, Vodafone, and GlaxoSmithKline. The Euro Stoxx 50 tracks the 50 most liquid shares in the Euro Zone. Its top five shares are Total, Sanofi-Aventis, Nokia, BCO Santander Central HIS, and ENI.

The JSE and Deutsche Bank indicated at the time that they would be introducing Itrix funds to track American and Asian indices in the first quarter of 2006.

Itrix trades on the JSE like any other share. It’s just as easy—and cheap—to buy a share in Itrix as it is to buy Anglo American. However, Itrix FTSE exposes you to a whole basket of shares, including, interestingly enough, Anglo American (as its primary listing is in London and forms part of the FTSE 100).

The funds are priced in rand at 1/100th of the underlying index levels. For example, to calculate the value of the UK Itrix, you take the FTSE 100 index level, divide it by 1 000, and multiply it by the rand/pound exchange rate. So if the FTSE 100 is trading at 7 479 and the rand/pound exchange rate is R19.81, then the Itrix should trade at roughly R148.16 per share.