Satrix, South Africa's leading provider of index-tracking products, will list a new exchange traded fund (ETF) during the first quarter of 2024, upon approval from the JSE. The Satrix JSE Global Equity ETF (STXJGE) will give investors an equity building block that upweights local companies that have their primary listings offshore. It will track the FTSE/JSE Global Investor Index.
Kingsley Williams, Chief Investment Officer at Satrix*, says "This new fund represents a shift in investment strategy, catering to the market's evolving needs. It will provide an alternative option for investors who want to diversify their local equity portfolios and incorporate higher exposure towards rand hedge stocks, particularly in light of the upcoming harmonisation of the FTSE/JSE benchmark indices (ALSI and SWIX) in March 2024.
He said over the past few years local equity indices using the All Share Index (ALSI) construction methodology have significantly reduced exposure to inward-listed global companies such as BHP Group (BHG), Compagnie Financiere Richemont (CFR), Glencore (GLN), Prosus (PRX), and Anheuser-Busch InBev (ANH), due to a combination of corporate actions, restructuring and index rules resulting in substantially reduced floats.
“This has exposed these equity indices more to local macroeconomic idiosyncrasies (often referred to as SA Inc. factors), which clients may wish to diversify away from within their local equity exposure.”
“Investors can blend the Satrix JSE Global Equity ETF with existing ETFs to gain increased exposure to dual-listed companies on the JSE, as historically offered by the ALSI indices.”
“The new ETF has a significantly higher rand hedge profile than other broad local equity market indices, providing a potential cushion should the local currency weaken. It also offers a diversified source of revenue from its constituents, with higher earnings emanating from offshore markets across a variety of sectors. That makes it ideal for investors with a longer-term investment horizon who can withstand equity-like volatility,” adds Williams.
Blending Local Equity Exposure With Global Investment Appeal
Satrix says the Satrix JSE Global Equity ETF tracks the recently launched FTSE/JSE Global Investor Index, focusing on the 50 largest companies listed on the JSE. This approach diverges from broad local equity benchmark indices by using global free-float metrics for weight determination. Local equity benchmark indices typically reduce the weight of dual-listed companies, by only considering the proportion of shares held locally.
Key Features of this ETF include:
- Diverse portfolio: Targets the 50 largest JSE-listed companies.
- Global free-float weighting: Uses global free-float metrics, offering higher exposure to dual-listed companies.
- Quarterly rebalancing: Ensures the ETF stays current with market changes.
- Competitive TER: An attractive Total Expense Ratio (TER) of 0.15% makes it an affordable option for a diverse range of investors.
- Easy access: The ETF will be available for trading on the JSE, making it accessible for a variety of investment applications.
Visit www.satrix.co.za for more information on the Satrix JSE Global Equity.
*Satrix is a division of Sanlam Investment Management.
Satrix Investments (Pty) Ltd is an approved financial service provider in terms of the Financial Advisory and Intermediary Services Act, No 37 of 2002 (“FAIS”). The information above does not constitute financial advice in terms of FAIS. Consult your financial adviser before making an investment decision. While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSP, its shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information.
Satrix Managers (RF) (Pty) Ltd (Satrix) is a registered and approved Manager in Collective Investment Schemes in Securities. Collective investment schemes are generally medium- to long-term investments. With 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 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 and can engage in borrowing and scrip lending. Should the respective portfolio engage in scrip lending, the utility percentage and related counterparties can be viewed on the ETF Minimum Disclosure Document.
For more information, visit https://satrix.co.za/products