Satrix Shares Its 2024 Top Investment Trends

From strong global growth in indexation, FTSE/JSE index harmonisation to new opportunities for offshore exposure, Satrix recently shared its top investment trends for 2024.

Kingsley Williams, Chief Investment Officer at Satrix*, says despite a volatile 2023 market, Satrix saw considerable business growth. “Our business crossed the R200 billion in AUM mark (as at 31 December 2023) despite a very challenging environment and we are grateful to all our clients for their support. We had a busy year onboarding the NewFunds ETFs from Absa which expanded our ETF product range, and we're looking forward to exciting product developments this year.

Satrix’s Top Trends for 2024: 

Indexation trends and the shift towards indexed strategies: 

The shift towards indexed strategies continues to gain momentum globally. As of the end of 2022, 33% of global assets were managed according to an indexed approach, up from 14% in 2011. In the US, indexed assets now surpass the 50% mark across all asset classes, not just equities. In Europe, indexed funds represent 27% of total AUM, while actively managed funds have seen a decline in AUM. Nico Katzke, Head of Portfolio Solutions at Satrix, says that South Africa is still lagging behind Europe, but it’s experiencing strong indexation growth, with almost 14% of South African listed equity and property funds now indexed across the collective investment scheme market.

ALSI/SWIX harmonisation’s impact on investors: 

Williams says the March 2024 rebalancing set to align the All Share (ALSI), Capped All Share, and various subsets like the Top 40 with the Shareholder Weighted Index (SWIX) approach will down-weight the remaining grandfathered companies – Anglo American, Mondi, and Investec PLC – in the ALSI-methodology indices. There will be a prorate upweight of the remaining companies. This strategic move, termed 'index harmonisation', aims to eliminate the discrepancies between the ALSI and SWIX indices. Eventually, as the indices fully adopt the SWIX structure, the SWIX indices will be phased out. 

Williams adds that grandfathered companies have historically undergone organic down-weighting in the ALSI indices as they restructured and lost their grandfathered status. “A comparison of stock and sector weights between December 2021 and December 2023 reveals a significant reduction in the weight of grandfathered and dual-listed companies – from 37% to 17% and 46% to 27%, respectively. Companies like Richemont and BHP Group have seen substantial weight reductions following business restructurings during this period, while other shares have increased in weight.” He notes that the transition to a unified benchmark approach is a logical step that reflects the evolving market dynamics and the need for a unified benchmark for broad market indices.

Increased opportunity for offshore exposure:  

Williams says Satrix is excited about the March listing of the Satrix JSE Global Equity ETF (STXJGE), tracking the FTSE/JSE Global Investor Index. This ETF will offer investors increased exposure to offshore earnings and rand hedge stocks. In addition, the February listing of the Satrix MSCI ACWI ETF (STXACW) tracking the MSCI All Country World Index, offers another building block in an investor’s overall asset allocation with exposure to countries like China and India in addition to developed markets. 

Williams says that as Satrix navigates the evolving investment landscape, its focus remains on delivering innovative solutions that meet the diverse needs of its clients. 

*Satrix is a division of Sanlam Investment Management

Disclaimer

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.

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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