School of Economics and Finance (ETDs)

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    Measuring the performance and asset allocation of robo-advisors in BRICS
    (University of the Witwatersrand, Johannesburg, 2024) Maluleke, Lethabo; Seetharam, Yudhvir
    The financial industry has undergone some digital changes over the past decade. Financial technology (FinTech) is a result of this digital change and robo-advisors constitute FinTech in the wealth management space. The emergence of robo-advisors is a global phenomenon and, in this study, the performance and asset allocation of the robo-advisors from Brazil, Russia, India, China, and South Africa (BRICS) were measured. BRICS countries are one of the largest growing economies and provide international investors with diversification. The purpose of this study was to analyse if the recommended portfolios of the robo-advisor can perform similar to a benchmark and to explain the performance differences between the different recommended portfolios of the robo-advisors from each country using a returns-based style analysis. Furthermore, this study analysed the performance of robo-advisors before and after considering fees and the returns-based style analysis was also used to capture the exposure of each robo-advisor to mutually exclusive asset classes. The data included four robo-advisors in total with one robo-advisor from each country (a total of 62 portfolios) as there was a removal of the Russian EFTs due to the Russian- Ukraine war of 2022. The sample period was from 2015 to 2022 as most robo-advisors only became available after 2015. The performance tests that were performed were the Sharpe ratio, Jensen’s alpha, Treynor ratio and Manipulation-proof performance measure. It is found that there are certain countries that have robo-advisors with portfolios that perform similar to the benchmark and do not outperform the benchmark and other countries that have portfolios that outperform the benchmark and the portfolios do not perform similar to the benchmark. Furthermore, it is found that performance differences can be explained by the investment style i.e., whether the portfolios have exposure to the same assets. The performance differences can also be explained by asset allocation in each portfolio based on uncorrelated assets.
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    Analysis of tax relief measures as a result of the covid-19 pandemic in south africa, compared with the tax measures of other members of the brics group
    (University of the Witswatersrand, Johannesburg, 2023) Selemela, Elsie; Ram, Asheer J.
    The purpose of this report is to analyse tax relief measures that were taken as a result of the COVID-19 outbreak in South Africa, evaluate the approach taken and compare it with other countries in the BRICS international organisation. The COVID-19 pandemic caused numerous company closures and employment losses (IMF, 2020). Governments worldwide had to intervene to support their citizens and keep businesses afloat (IMF, 2020). In order to maintain widespread access to essential goods and services, taxation is crucial (IMF, 2020). The dire effect on economic activities around the world influenced tax laws (IMF, 2020). It fell to tax administrators to ease the tax burden on taxpayers as they were facing hardships (OECD [Organisation for Economic Co operations and Development], 2020). The International Monetary Fund (IMF) states that the design of tax systems can help stabilise economies when faced with crisis (IMF, 2020). The South African government implemented tax relief measures because of COVID-19, although taxpayers are still experiencing the detrimental effects of COVID-19. It is the government’s wish to offer additional help to businesses and individuals who are still facing these hardships and also assist in rebuilding businesses (SARS, 2021). This report will look at tax measures that were taken by South Africa in comparison to those that were taken by Brazil, Russia, India and China to determine the usefulness of these measures in dealing with the effects of COVID-19 on taxes. Some measures were introduced for a short time and therefore are no longer applicable, but it is important to consider them in this report because they might have long-term effects on taxes. The findings of this analysis indicate which measures were used, when they were implemented, and how taxes in the BRICS countries changed while adjusting to COVID-19. It was found that tax policies put in place in South Africa were unjustified since they decreased tax collection without any measures in place to boost it (IMF, 2020). Examining what other BRICS nations were doing to increase tax collection during the COVID-19 outbreak can help identify areas for improvement.