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A Fin24 user wants advice on investing in exchange-traded funds over the long term. He writes:
I am interested in investing in exchange-traded funds (ETFs) in the long term, but need to know where I can find expert advice on when to buy and when to sell.
Which Satrix ETF is best to invest in, and how will I know when to sell this ETF?
Mike Brown of etfSA.co.za responds:
In the long term – five years or more – 90% of total investment performance comes from having the correct asset allocation and not from individual stock selection or through consistent buying and selling of shares or ETFs.
A buy and hold strategy works best.
The proven method to grow wealth includes choosing an asset allocation strategy that diversifies your portfolio among bonds, equities, offshore investment, listed property and possibly other assets, like commodities.
It also includes reinvesting the dividends received and avoiding the capital gains tax implications and high transaction costs of portfolio churn.
ETFs are ideal for long-term investment purposes as they now cover all asset classes and market sectors.
ETF investment platforms also enable investors to make regular debit order contributions, automatically reinvest dividends and do switches at low cost, if it becomes necessary to amend the asset allocation mix.
Expert advice on structuring ETF portfolios is more difficult to find, as the ETF industry is still in its infancy.
Most financial advisers still focus on unit trusts and over-the-counter products and are not taught to advise on listed securities.
Stockbrokers tend to prefer advising clients on individual shares and not collective investment products like ETFs.
Which Satrix ETF to invest in?
Performance data on the various Satrix ETFs and other ETF products is easily available as these are JSE-listed products.
Prices, portfolio components, net asset values, costs, etc are readily displayed on the websites of exchange-traded products (ETPs) or alternatively can be viewed on www.etfsa.co.za.
Some idea of the various Satrix ETF performances over the past 10 years are shown below.
As the above table shows, an investment in Satrix INDI 25 ETF would have outperformed other Satrix ETF products over periods of three, five and 10 years.
etfSA.co.za, which specialises in ETPs, has all the information required for investors to select among any of the 63 ETPs now listed on the JSE, and also provides a transaction platform ideal for long-term investors. The website also provides advice on long-term portfolios, using only ETPs.
Further details on Satrix products can also be obtained from the Satrix website. The etfSA website also contains calculators, watchlists, graphic presentations, profile sheets, fact sheets, etc on all ETFs, including the Satrix products.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.
Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.
I am interested in investing in exchange-traded funds (ETFs) in the long term, but need to know where I can find expert advice on when to buy and when to sell.
Which Satrix ETF is best to invest in, and how will I know when to sell this ETF?
Mike Brown of etfSA.co.za responds:
In the long term – five years or more – 90% of total investment performance comes from having the correct asset allocation and not from individual stock selection or through consistent buying and selling of shares or ETFs.
A buy and hold strategy works best.
The proven method to grow wealth includes choosing an asset allocation strategy that diversifies your portfolio among bonds, equities, offshore investment, listed property and possibly other assets, like commodities.
It also includes reinvesting the dividends received and avoiding the capital gains tax implications and high transaction costs of portfolio churn.
ETFs are ideal for long-term investment purposes as they now cover all asset classes and market sectors.
ETF investment platforms also enable investors to make regular debit order contributions, automatically reinvest dividends and do switches at low cost, if it becomes necessary to amend the asset allocation mix.
Expert advice on structuring ETF portfolios is more difficult to find, as the ETF industry is still in its infancy.
Most financial advisers still focus on unit trusts and over-the-counter products and are not taught to advise on listed securities.
Stockbrokers tend to prefer advising clients on individual shares and not collective investment products like ETFs.
Which Satrix ETF to invest in?
Performance data on the various Satrix ETFs and other ETF products is easily available as these are JSE-listed products.
Prices, portfolio components, net asset values, costs, etc are readily displayed on the websites of exchange-traded products (ETPs) or alternatively can be viewed on www.etfsa.co.za.
Some idea of the various Satrix ETF performances over the past 10 years are shown below.
As the above table shows, an investment in Satrix INDI 25 ETF would have outperformed other Satrix ETF products over periods of three, five and 10 years.
etfSA.co.za, which specialises in ETPs, has all the information required for investors to select among any of the 63 ETPs now listed on the JSE, and also provides a transaction platform ideal for long-term investors. The website also provides advice on long-term portfolios, using only ETPs.
Further details on Satrix products can also be obtained from the Satrix website. The etfSA website also contains calculators, watchlists, graphic presentations, profile sheets, fact sheets, etc on all ETFs, including the Satrix products.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.
Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.
