Access growing industries in emerging markets across the world
While South Africa has world class companies to invest in, there are many industries, economic regimes and currencies you are simply not able to access by keeping your capital in domestic assets. To add some perspective, South Africa is 1 of 23 global emerging market countries, and there are a further 23 countries classified as developed markets. By adding exposure to international companies you are diversifying your investment portfolio to include global markets and industries which complement your local holdings.
Satrix MSCI Emerging Markets ETF
The Satrix MSCI Emerging Markets ETF aims to replicate the performance of the MSCI Emerging Markets Investable Markets Index and enables you to invest in global emerging markets 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 0.40% p.a. and will be calculated after 1 year.
About the MSCI World Emerging Markets Investable Market index
The MSCI World Emerging Markets IMI Index represents large, mid and small cap companies across 23 emerging markets globally. The index covers approximately 99% of the free float-adjusted market capitalization in each country. South African companies make up approximately 7% of the index.
The emerging market countries at 31 May 2017 include Brazil Chile, China, Columbia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Russia, Qatar, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates.
The table below shows the performance of the index for periods ending 31 May 2017.
Past performance is simply for information and should not be seen as a guide to future performance.
Risk Profile: HIGH
Investing in equities is high risk and international equities are no different. 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. Since you are investing South African rand to access US dollar based indices, you are exposed to exchange rate risk - this means that your performance will be positively affected if the rand weakens against the dollar and negatively affected if the rand strengthens. Investments in emerging markets may be subject to greater volatility compared to established economies due to differences in accounting practices, economic or political stability.
The underlying portfolio
Satrix will aim to replicate the index by investing in the iShares Core MSCI Emerging Markets IMI UCITS ETF*.
*iShares® are 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 $5.4 trillion.
POSTED : 29 JUNE 2017