Now you can invest in the index that is home to the leading names in innovation.
As South Africans, we need to diversify our local investment portfolios by adding offshore exposure. Global ETFs are a great option for offshore exposure because they are broad-based, cost-effective and there are choices available to suit all needs. Investors now have access to another global ETF as Satrix adds the Satrix Nasdaq 100 ETF to its range.
Satrix Nasdaq 100 ETF
The Satrix Nasdaq 100 ETF aims to replicate the performance of the Nasdaq-100® index and enables you to invest in the 100 largest, non-financial companies listed on the Nasdaq Stock Market in a single trade. It will be listed on the JSE which means you can invest in South African Rand and are therefore not subject to any exchange control approvals. As this is a total return ETF, the income from the underlying securities is automatically reinvested and no distributions will be made. The Total Expense Ratio (TER) will be targeted at 0.48% p.a. and will be calculated after 1 year.
More about the Nasdaq-100® index
The Nasdaq-100® index is a market cap weighted index and was launched in January 1985. The index is well known for being tech heavy but also includes industrial, technology, retail, telecommunication, biotechnology, health care, transportation, media and service companies. It is one of the most watched indices in the world, and for good reason, as some of the most innovative and forward-thinking companies are listed on it. The likes of Apple, Alphabet, Microsoft, Nvidia, Facebook, Amazon, Netflix and PayPal form part of the index.
The Top 10 index constituents as at 31 December 2017 are:
The sector breakdown at 31 Dec 2017 shows the index is heavily weighted toward technology companies:
The performance of the NASDAQ-100 index over time (in USD):
Since this is a rand-denominated ETF, investors should be aware of the effect the R/$ exchange rate can have on investment performance. Please read our article The currency and your Satrix Global ETF for a detailed explanation.
What does NASDAQ stand for?
The National Association of Securities Dealers Automated Quotations. At the time of the stock exchange launch in 1971 it was the first exchange in North America to, as its name implies, handle trades electronically. At that time, all the stock exchanges in existence used open outcry trading which involved shouting and the use of hand signals to get your trade known or done.
So, true to its character, the Nasdaq not only promotes and lists companies that can change the world – it is a game changer itself.
“The Nasdaq-100 is the benchmark for the new industrials; the global companies changing the way we work, socialise, transact, and move every single day,” said Dave Gedeon, Vice President and Head of Global Index Research and Product Development for Nasdaq Global Indexes. “From technology to medicine to industry, there is almost no corner of innovation that Nasdaq-100 does not reach and now investors in South Africa are able to access these innovative names in the ETF wrapper for the first time. We are very excited to work with Satrix to deliver the first Nasdaq-100 ETF in Africa.”
Who should invest in the Satrix Nasdaq 100 ETF?
- Investors with an aggressive risk profile who are looking for longer-term capital growth from offshore exposure.
- Investors who understand the potential for increased volatility that comes from investing in an index with a narrower focus viz. tech companies.
Risk Profile: HIGH
Investing in equities is high risk. By investing in equities, you increase the probability of higher returns, but you also introduce volatility into your portfolio in the short to medium term. Equity investing should always be viewed as long-term.
Fund Classification and share code
Regional - Equity - General
JSE code: STXNDQ
How to invest
Investors can invest online via SatrixNOW or via the Satrix Investment Plan.
The various fees are highlighted below. Bear in mind that effective 1 April 2018 the VAT rate has increased to 15%.
This ETF can also be traded through stockbrokers and other online platforms - investors can request the specific cost profile from the particular provider.
The underlying portfolio
Satrix will aim to replicate the index by investing in the iShares NASDAQ-100 UCITS ETF*, the underlying fund. The investment objective of the underlying fund is to provide investors with a total return, taking into account both capital and income returns, which reflects the return of the Nasdaq-100 ®index. In order to achieve this investment objective, the investment policy of the underlying fund is to invest in a portfolio of equity securities that replicates the component securities of the benchmark index. Replicates means that it physically holds all the index constituents in the same weight as the index. Further information on the underlying fund can be obtained directly from the iShares website: iShares Nasdaq 100 UCITS ETF
*iShares® is a family of exchange-traded funds (ETFs) marketed and managed by BlackRock. Each share represents a portfolio of stocks designed to reflect the returns of a specific index as closely as possible. BlackRock is a global leader in investment management, risk management and advisory services for institutional and retail clients with an AUM of $6.28 trillion as at 31 December 2017.
POSTED : 14 MARCH 2018