Satrix, a pioneer in the index-tracking space, is launching three new global exchange traded funds (ETFs), making it possible to invest in both developed and emerging markets globally.
“Our investors can now access global equity markets on the JSE alongside their local ETF investments. We are always looking at ways in which we can expand our offering and these rand-denominated ETFs allow investors to access global markets with ease, and at a low cost” says Helena Conradie, CEO of Satrix.
Why global investing makes sense
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 all your capital in domestic markets. To add some perspective, South Africa is one of 24 emerging market countries globally, and there are a further 23 countries classified as developed markets. By adding exposure to international companies you are diversifying your investment portfolio.
New ETFs provide access to US, developed and emerging markets
The ETFs offer a mix of developed and emerging market exposure and are very competitively priced, with a management fee of 0.15%p.a. The targeted Total Expense Ratio (TER), which includes this management fee, will be calculated after one year and is shown for each fund in the table below.
The Satrix MSCI World ETF will track the performance of the MSCI World Index, which represents large and mid-cap companies across 23 developed markets globally. The index covers approximately 85% of the free float-adjusted market capitalization in each country.
The Satrix MSCI Emerging Markets ETF will track the performance of the MSCI Emerging Markets Investable Market Index (IMI), which represents large, mid and small cap companies across 24 emerging market countries. The index covers approximately 99% of the free float-adjusted market capitalization in each country.
The Satrix S&P 500 ETF will track the performance of the S&P 500® Index, which is widely regarded as the best single gauge of large-cap equities in the United States. The index includes 500 of the leading companies in the US market and captures approximately 80% coverage of available market capitalization.
Satrix will replicate the indices by investing in funds of the iShares® Core Series UCITS ETFs. iShares® are a family of exchange traded funds (ETFs) marketed and managed by BlackRock.*
Accessing global markets in ZAR
Individuals will not be subject to any exchange control processes, since they are investing in global ETFs on the JSE in South African rand (ZAR). Investors should note that since they are investing in rands to access US dollar based indices, they are also exposed to exchange rate risk. This means that investment performance will be positively affected if the rand weakens against the dollar, and negatively affected if the rand strengthens.
The total return nature of the new ETFs means that the income from the underlying securities is automatically reinvested and the ETFs will therefore not make distributions.
“In keeping with our purpose of democratising investing for all, if you invest via our SatrixNOW.co.za platform, there is no minimum investment amount and no annual platform fee” says Conradie. Satrix ETFs are also available on other transacting platforms like the Satrix Investment Plan, etfSA, EasyEquities, iTransact, and Standard Bank online, to name a few. If you already have a personal stockbroking account, simply contact your broker to invest.
No brokerage fees when taking up the IPO
Investors have the opportunity to be the first to invest in these new ETFs in the initial public offering (IPO), which opens on Friday, 30 June. Those taking up the IPO are in a fortunate position in that they will pay no brokerage fees on their initial investment and will participate in the performance of the ETFs from the first day they trade on the Johannesburg Stock Exchange (JSE).
The anticipated date of listing on the JSE is Tuesday, 25 July 2017.
Visit www.satrix.co.za to read more about the new ETFs and the IPO process.