Heritage Month Feature
Why should you invest locally? For Heritage month, we look at three Satrix funds that are proudly South African and what makes them a compelling offering for local investors.
Launched in 2000, this is South Africa’s first exchange-traded fund (ETF), which tracks the largest blue-chip companies on the JSE, such as Anglo American, Naspers and MTN. It’s been the People’s Choice Award winner at the South African Listed Tracker Funds Awards (SALTA) for five consecutive years. The Satrix 40’s portfolio manager is Nonhlanhla Mphelo.
Why do you think it makes sense to invest locally, even though so far this year the JSE has declined?
There’s nothing stopping you from investing offshore, but it’s always a good idea to diversify and allocate some of your funds towards local assets and some towards offshore assets. Whichever combination you choose, one can expect some market ups and downs (volatility). The Satrix 40 has been around for 22 years and has a proven track record. Even if you have a higher risk appetite and want to invest offshore, you can do this via a feeder fund offered here in SA. There are a number of SA-run international feeder funds, such as the Satrix MSCI World Equity Index Feeder Fund, and others which focus on China and India. Investing offshore is a good option when the rand is strong and expected to weaken over your investment term. But, irrespective of whether the rand is strong or not, diversification is key and if you want to play it safe, invest in local and international funds.
With the rising cost of living, some people might argue that they don’t have enough money to invest. Is this true?
Investing is a habit that you develop over time. If you can afford to buy an ice-cream for yourself, why not invest? With SatrixNOW, you can set aside even a small amount like R50. A lot of South Africans use stokvels to create wealth. Investing in the stock market is similar, except you need to take a longer-term view. For example, if you had invested R100 000 in the Satrix 40 in 2000, it would be worth R1.5 million today. That’s the power of not touching your investment and letting compound interest work its magic.
The Satrix Dividend Plus Index Fund (Satrix DIVI) tracks 30 JSE-listed companies expected to pay the best normal dividends in the coming year. Like the Satrix 40, these currently include some large-cap stocks, such as BHP, Nedbank and Tiger Brands, and some lesser-known mid-cap stocks. The Satrix DIVI’s portfolio manager is Rekha Bawa.
What makes the Satrix DIVI unique?
It’s a dividend fund that pays out on a quarterly basis. We track 30 stocks that are high yielding, in other words, they pay regular dividends. These are typically mid- and large-cap stocks. Property stocks are excluded otherwise they would dominate the index, given most of their return is made up of the distributions they pay out. Our five-year annualised return has been exceptionally good. When you receive your dividends, you could consider splashing out on something you like, like a nice braai for Heritage Day, maybe? If you want to be smart, you could invest in the Satrix DIVI via a SatrixNOW tax-free savings account to avoid being taxed on dividends.
What makes this fund appealing?
Like the Satrix 40, the Satrix DIVI is a pure equity fund, meaning it invests in stocks only. Equity funds like the Satrix DIVI are aggressive funds with a high-risk profile, and investors can expect market ups and downs. It will appeal to investors seeking an income from their portfolio. The Satrix DIVI provides exposure to high yielding stocks, which has historically captured the investing styles of both value and quality – stocks which are undervalued by the market and which generate healthy cashflows to distribute to investors.
The Satrix Capped All Share ETF (Satrix CAPI) tracks the FTSE/JSE Capped All Share Index. Launched in November 2021, this is South Africa’s first market-capitalisation weighted index that offers exposure to the whole market. The portfolio manager is Lauren Jacobs.
What’s different about this fund?
Satrix CAPI tracks all 140 stocks listed on the JSE. It gives investors access to the full spectrum of small-, mid- and large-cap stocks. Investors like it because it offers broader market exposure and more stable returns than other equity funds. This fund offers high levels of diversification because of the spread between differently sized stocks. Large caps are more influenced by global factors, whereas smaller stocks are generally more protected from currency fluctuations. Put simply, with this fund, it has delivered more stable returns relative to large-caps only.
Is the fact that the fund has a 0% TER until 31 December a selling point?
Yes – it means that this ETF has zero management fees. We do not charge any fees for managing this fund until the end of 2022. There are some transaction costs, but these are negligible – about 0.025% a year. We believe we have an extremely compelling offering: access to the entire market for (almost) free.
How to Invest
Existing investor: Log in to your SatrixNOW account.
Satrix Managers (RF) (Pty) Ltd (Satrix) a registered and approved Manager in Collective Investment Schemes in Securities. Collective investment schemes are generally medium- to long-term investments. Unit Trusts and ETFs the investor essentially owns a “proportionate share” (in proportion to the participatory interest held in the fund) of the underlying investments held by the fund. With Unit Trusts, the investor holds participatory units issued by the fund while in the case of an ETF, the participatory interest, while issued by the fund, comprises a listed security traded on the stock exchange. ETFs are index tracking funds, registered as a Collective Investment, and can be traded by any stockbroker on the stock exchange or via Investment Plans and online trading platforms. ETFs may incur additional costs due to it being listed on the JSE. Past performance is not necessarily a guide to future performance and the value of investments / units may go up or down. A schedule of fees and charges, and maximum commissions are available on the Minimum Disclosure Document or upon request from the Manager. Collective investments are traded at ruling prices. A feeder fund is a portfolio that invests in a single portfolio of a collective investment scheme, which levies its own charges, and which could result in a higher fee structure for the feeder fund. International investments or investments in foreign securities could be accompanied by additional risks such as potential constraints on liquidity and repatriation of funds, macroeconomic risk, political risk, foreign exchange risk, tax risk, settlement risk as well as potential limitations on the availability of market information. The manager has the right to close the portfolio to new investors in order to manage it more efficiently in accordance with its mandate. Satrix Investments (Pty) Ltd is an authorised financial service provider in terms of the Financial Advisory and Intermediary Services Act, 2002.