Fund Focus | Satrix JSE Global ETF

Growth with Embedded Currency Optionality

In an environment of persistent currency volatility and divergent economic growth prospects, South African investors increasingly seek exposure to companies generating substantial offshore earnings without the complexity of direct international investment. The Satrix JSE Global Equity ETF (STXJGE) addresses this need by providing investors with access to the 50 largest JSE-listed companies that derive meaningful revenues from global operations, many with primary listings offshore and predominantly US dollar-denominated balance sheets.

Launched in March 2024, the fund tracks the FTSE/JSE Global Investor Index, which deliberately upweights dual-listed companies that traditional local equity indices typically downplay, recognising their fundamental strength as natural hedges against rand depreciation.

For investors navigating the interplay between dollar strength and the USD/ZAR exchange rate, this fund structure offers a particular strategic appeal. 

As global monetary conditions shift and currency movements reshape investment returns, companies with substantial offshore earnings and dollar-based liabilities benefit directly from rand weakness, a dynamic that has historically allowed the fund's underlying index to outperform domestic-focused equity benchmarks during periods of local currency pressure.

With minimal expenses and quarterly rebalancing, the Satrix JSE Global Equity ETF provides an efficient, liquid vehicle for investors seeking long-term capital growth while maintaining protection against currency erosion, making it a valuable complement to traditional local equity holdings in a diversified portfolio.

The Technical Advantage Over Traditional Local Equity Funds  

The ETF operates under a simple framework that produces profound portfolio implications. Rather than using the standard FTSE/JSE Capped All Share Index (CAPI) methodology, which weights companies based solely on their locally held free float, the index that this fund tracks applies the global free-float calculations to all constituents (in other words, anything but STRATE holdings). 

This means that for dual-listed companies (those with primary listings offshore), the index considers their entire global share capital when determining weightings.

The fund holds the 50 largest JSE-listed companies, rebalances quarterly with a 10% per holding cap (at rebalance), and comes with a 0.15% Total Expense Ratio (TER). The result is an index that dramatically reweights toward companies generating the bulk of their earnings in foreign currency, a structural shift that traditional local equity indices deliberately suppress. The chart below shows the weighting of the top 10 holdings of the fund compared with the weight of the same stocks in the FTSE/JSE Capped All Share Index:

The difference becomes immediately apparent when examining the above chart. Richemont, the luxury goods giant with a primary listing in London, commands just 2.28% of the FTSE/JSE Capped All Share Index but comprises 11.09% of the FTSE/JSE Global Investor Index, a five-fold amplification. British American Tobacco shows similar dramatic upweighting, at 1.66% versus 10.26%. BHP Group (mining, primary listing in Australia), Glencore (commodities, headquartered in Switzerland), and Anheuser-Busch InBev (beverages, headquartered in Belgium) all see substantial increases, reflecting their globally oriented earnings streams and US dollar-denominated balance sheets.

Conversely, stocks with predominantly domestic exposure, like Naspers and Gold Fields, which have meaningful local revenue exposure, are relatively downweighted in this ETF. This is not a flaw; it's the fund's core design. By deliberately upweighting companies that earn in hard currency and repay liabilities in dollars, the Satrix JSE Global Equity ETF creates a natural structural hedge.

When the rand weakens against the dollar, these offshore-earning giants benefit from currency translation gains, with their dollar revenues converting to more rand on the balance sheet. Traditional local equity funds suppress this exposure precisely because they weight companies by local holdings rather than economic reality, making the Satrix JSE Global Equity ETF a fundamentally different bet on local equities, that captures global economic participation while trading in rands on the JSE. 

What's Inside the Fund  

The portfolio composition of the Satrix JSE Global Equity ETF reveals just how dramatically it departs from traditional South African equity exposure. Where the Satrix SA Inc AMETF's comparison fund (which tracks the proprietary Satrix SA Inc Index) derives 80.68% of revenues from South Africa with 58.54% currency sensitivity, the FTSE/JSE Global Investor Index flips this logic entirely. Just 20.11% of the index's revenues originate domestically, with a currency sensitivity of -17.49%, a negative figure that signals the fund's fundamental character.

That negative correlation is not a weakness; it's the entire point. When the rand depreciates against the US dollar, the FTSE/JSE Global Investor Index tends to appreciate, as US dollar-denominated earnings and balance sheet assets translate back to higher rand valuations. This stands in stark contrast to the CAPI, which despite lower currency sensitivity (2.36%), still derives nearly half its revenues (44.72%) from South African sources, anchoring it to domestic economic fortunes.

The sector allocation underscores this offshore-earnings tilt even more starkly, as seen below:

Food, Beverage and Tobacco occupy 17.8% of the FTSE/JSE Global Investor Index compared to just 4.5% in the Capped All Share, reflecting the massive weightings of British American Tobacco and Anheuser-Busch InBev, both globally distributed consumer staples with dollar-based operations. Consumer Products and Services similarly expand to 11.1% from 2.6%, capturing international luxury (Richemont) and other globally oriented consumer plays. Basic Resources comprises 36.8% versus 27.5%, reflecting mining giants like BHP and Glencore that earn in hard currency. Conversely, Banks shrinks to 10.9% from 21.1%, and Real Estate tumbles from 5.0% to 1.8%, all domestic-focused sectors that generate rand-denominated returns and possess limited currency hedging characteristics.

The Satrix JSE Global Equity ETF represents a fundamentally planned equity portfolio designed to marry local JSE liquidity with global earnings participation. Investors trading on the JSE in rand effectively gain exposure to international commodity cycles, luxury consumption trends, and multinational corporate operations, all the export-oriented dynamics that benefit when South Africa's currency weakens relative to the dollar.

The Currency Logic: Historical Performance in Weakening Rand Environments  

The relationship between the ETF’s index and rand weakness is neither theoretical nor recent, it is embedded in over a decade of market data. The historical performance chart below reveals a striking correlation.

The periods of rand depreciation (purple bars on the USD/ZAR chart, moving upward) consistently align with the FTSE/JSE Global Investor Index outperforming the local equity market benchmark (Capped SWIX in this instance). This is precisely the thesis at work: when the rand weakens, offshore-earning companies benefit from currency translation gains, while their dollar-denominated debt becomes relatively cheaper to service.

Key periods highlighted above are:

• 2015-2016 Rand Crisis (Nenegate): The dramatic USD/ZAR spike to levels above 17.00 coincided with one of the FTSE/JSE Global Investor Index's most pronounced outperformance windows. Companies like BHP, Richemont, and BAT saw their foreign earnings translate to substantially higher rand values, propelling the index significantly above its traditional All Share peer.
• 2018-2019 Currency Volatility: As the rand weakened again through the high-14s and into mid-15s, the FTSE/JSE Global Investor Index reasserted outperformance, demonstrating consistent correlation with depreciation cycles.
• 2022-2023 Rand Strength Headwind: Conversely, when the rand strengthened (USD/ZAR falling toward 13.72), the index underperformed as currency translation worked in reverse. This inverse relationship also holds across the dataset.

Outperformance Without Currency Tailwinds  

The Satrix JSE Global Equity ETF returned 25.85% over the past 12 months to the end of June, significantly outpacing the FTSE/JSE Capped All Share Index's 19.38%. Yet the conventional narrative of outperformance through rand weakness collapses under scrutiny as the rand/US dollar exchange rate appreciated by 7.77% over the same period. The return of 6.5% from the ETF is mainly coming from the below:

Over the past six months, the divergence widened further as the FTSE/JSE Global Investor Index returned 5.79% while the FTSE/JSE Capped All Share Index fell 2.80%, despite continued rand appreciation of 1.09%.

The performance seen from this recent period shows that the Satrix JSE Global Equity ETF is a growth fund with embedded currency optionality. Investors are fundamentally buying exposure to multinational corporations as shown by figure 4. 

These companies operate at a global scale, earning in dollars, competing in global markets, and benefiting from global demand cycles. The currency hedge is a secondary benefit, a kicker that amplifies returns when the rand weakens but does not prevent the fund from outperforming when global conditions are favourable and the rand strengthens.

Disclaimer

_{Satrix consists of the following authorised Financial Services Providers: Satrix Managers (RF) (Pty) Ltd and Satrix Investments (Pty) Ltd. The information does not constitute financial advice. While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSPs, their 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.} 

_{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.  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.}

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