Satrix Goes Beyond Bricks And Mortar With Tax-Smart Global Property ETF

For decades, the definition of a property investment was tangible and static. It was the shopping mall, the office block, or the residential complex down the road. But as Satrix listed its new Global Property Feeder ETF, the definition of real estate has shifted from pure brick-and-mortar to the critical infrastructure powering the digital economy.

It is also a shift towards smarter investing. By utilising a specific Irish-domiciled structure, the new ETF allows South African investors to benefit from a reduced 15% withholding tax on US dividends, half the standard 30% rate, turning global diversification into a tax-efficient yield enhancer.

Lauren Jacobs, Senior Portfolio Manager at Satrix, unpacks why the traditional view of property is evolving and why the next frontier for South African investors lies in tax-smart global diversification.

From Shopping Malls To The Cloud

If the last decade of local property was defined by retail and office space, the next decade of global property belongs to the digital economy. The portfolio of the Satrix Global Property Feeder ETF looks vastly different from the traditional property funds South Africans are accustomed to.

“When we look at real estate globally, we are seeing a massive shift towards what we call digital infrastructure,” explains Jacobs. “It is no longer just about office blocks and retail malls. It is about data centres that house the servers and networking equipment powering the internet, and the logistics warehouses that drive e-commerce.”

The ETF tracks the FTSE EPRA/Nareit Developed Index, which includes top constituents like Equinix (data centres), Prologis (industrial logistics), and Welltower (healthcare).

“This is an evolution that reflects structural growth trends rather than cyclical rental demand,” says Jacobs. “For example, healthcare REITs are benefitting from an ageing global population and the outsourcing of medical infrastructure. These are themes, along with the tech-driven demand for data storage, that are largely absent from the local property sector.”

Breaking The “Home Bias”

South African investors often exhibit “home bias,” overallocating to local assets despite the local market representing only a fraction of the global market. Jacobs notes that while local property faces headwinds from weak domestic growth and infrastructure challenges like costly power outages, global REITs offer exposure to numerous developed markets, including the US, Japan, and Europe.

“The correlation between the local property market and global REITs is very low,” notes Jacobs. “Local property is sensitive to local interest rates and political risk, whereas global property is driven by developed market economic trends. By adding global property to a portfolio, investors aren’t just doubling up on real estate exposure; they are accessing entirely different economic drivers and currency diversification.”

When Efficiency Pays For Itself

Perhaps the most compelling argument for this specific ETF lies in its structure. In a world where fees and taxes can erode returns, the Satrix Global Property Feeder ETF utilises a structural advantage that benefits the end investor.

The fund feeds into the Irish-domiciled HSBC FTSE EPRA NAREIT Developed UCITS ETF. Under a double taxation treaty between Ireland and the United States, the fund pays a reduced withholding tax of 15% on dividends from US equities, compared to the standard 30%.

“With US stocks making up over 62% of the index, this is a significant advantage,” Jacobs explains. “The index calculation assumes a 30% withholding tax, but our underlying fund only pays 15%. This creates a structural benefit where the fund can consistently outperform its benchmark index, net of fees.”

Jacobs points out that this “structural alpha” effectively subsidises the cost of the investment. “Even with a targeted annual Total Expense Ratio of 0.45%, the expectation is that the fund will perform in line with the benchmark because the tax savings effectively offset the fees. It’s a gain for the investor at the end of the day.”

The Building Block For The Modern Portfolio

As asset classes converge, listed property offers a unique hybrid: the liquidity and capital growth potential of equities, combined with the income-generating characteristics of bonds.

“Listed property is similar to equity; you can buy it on an exchange just like shares in Apple,” concludes Jacobs. “But it also provides a yield component that improves the overall income of a portfolio. It is diversifying away from pure global equity exposure while giving you a diverse return in hard currency.”

With the launch of the Satrix Global Property Feeder ETF (JSE code: STXGLP), Satrix continues its 25-year legacy of democratising the market, offering South Africans a cost-effective building block to design a globally diversified future.

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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