A Fin24 user writes:
I am a 33-year-old woman, recently married, self-employed,
with no children.
Currently my only investments are a retirement annuity and
some unit trusts in the Stanlib Value Fund. I've heard a lot about Satrix unit
trusts recently. I have about R500 per month to spend on unit trusts, and I'm
happy for them to sit there for several years. I have two questions about
1. There are seven different Satrix funds available - how do
I choose between them (or any unit trust, for that matter); what figures are
you supposed to compare and look at?
I usually compare the five-year charts, but there are so
many numbers floating around when you look at a unit trust, I'm not sure which
is supposed to be the acid test. When comparing to the standard Satrix 40, the
Divi, Indi and Rafi look good - or am I reading it wrong?
2. Should I buy direct through the Satrix Investment
Platform on the Satrix website, or find a broker - what will cost less in fees,
considering I'll only be investing R500 per month?
Brett Landman, CEO of Satrix Managers, answers:
Before I respond to the query, please note that Satrix is an
investment product provider.
As such, we do not render financial advice and therefore
cannot advise whether the Satrix exchange-traded funds (ETFs) are suitable for
the investor's financial needs, nor which of the Satrix ETFs the user should
choose to invest in.
Satrix securities can be acquired, like any other listed
share, through a stockbroker or online trading account.
If the investor does not have a stockbroker or online
trading account access to the Satrix, ETFs can be obtained through an
investment platform like the Satrix Investment Plan (which can obviously also
be used by investor with a stockbroker or online trading account).
The decision whether to buy through a stockbroker/online
trading account or the Satrix Investment plan should be determined by the client's
specific requirements and the different costs applicable to each method of
Each method of acquisition offers different functionality
and they have different cost structures.
The investor would accordingly have to compare the different
functionalities and cost structures applicable to each to arrive at the
decision appropriate for their needs.
For example, the Satrix Investment Plan offers a monthly
debit order facility whereas a stockbroker or online trading account does not
generally offer this functionality.
The brokerage charge applicable to the Satrix Investment
Plan is also likely to be significantly lower, at 0.10% (excluding VAT,) than
the brokerage charged by a stockbroker/online trading account (although an
annual administration fee is applicable to the Satrix Investment Plan).
On the other hand, the Satrix Investment Plan cannot
facilitate features such as stop orders available through a stockbroker or
online trading account.
Given the size of the users proposed monthly amount and the
requirement to invest by way of a monthly debit order, and without offering any
advice or recommendation, the Satrix Investment plan may be most suitable for
the user's needs.
The seven Satrix ETFs offer different types of equity
exposure (determined by the equity index being tracked or replicated by the
applicable Satrix ETF).
A direct comparison between the various Satrix ETFs by
looking at the past performance only of each (which is not indicative of future
performance) is accordingly not strictly appropriate in determining which of
the Satrix ETFs to acquire.
If an investor is looking for diversified equity exposure in
company and sector terms, they should look at the Satrix 40, Satrix Rafi,
Satrix Divi or Satrix Swix ETFs. The Satrix 40, the most popular and largest
Satrix ETF, offers exposure to the top 40 blue chip stocks on the JSE by market
Although offering diversified exposure in company and sector
terms, given the size of the resource stocks on the JSE the Satrix 40 ETF has a
resource bias (which is however reflective of the South African economy).
Satrix SWIX offers exposure to the same 40 shares held by
the Satrix 40 ETF but with a lower weighting to resources (because of the index
calculation methodology down weighting foreign shareholding of dual listed
stocks which are predominantly the resource counters).
Satrix Divi tracks an index (the FTSE/JSE Dividend Plus
index) that is calculated with reference to one year forecast dividends rather
than market capitalisations (as in the case of the Satrix 40).
The selection universe of the stocks held by the Satrix Divi
ETF is the FTSE/JSE Top 40 index and the FTSE/JSE mid-cap indices (excluding
The Satrix Divi ETF accordingly also offers diversified
exposure in company and sector terms (but a lower weighting in resource stocks
and a greater weighting in financial and industrial stocks).
The fund holds 30 different stocks included with reference
to their one year forecast dividends (the shares with the highest forecast
yield are included).
The different index construction methodologies, and
therefore the different holdings and weightings in each of the funds, offers
lower correlations in performance and allows investors to diversify their
passive holdings (which reduces risk).
The funds will perform differently over various time periods
and in different market conditions. The Satrix Divi, for example, has performed
exceptionally well in the market conditions experienced over the past three
years (it shares held in its portfolio have defensive qualities), as has the
Satrix Rafi ETF.
The Satrix Rafi tracks the FTSE/JSE Rafi 40 index, which is
not a market capitalisation weighted index but rather looks at company metrics
or fundamental factors (sales, cash flow, book value and dividends).
Once again the different calculation methodologies result in
the portfolio holding stocks in different weightings to the market cap weighted
Satrix 40 thereby offering diversification through lower correlations in
However, like Satrix 40, the Satrix Rafi ETF offers exposure
to a diversified portfolio of shares in company and sector terms. The index
tracked by the Satrix Rafi ETF is designed to perform well.
The Satrix Rafi is also a total return ETF, which means that
the distributions that it pays out are not paid to investors in cash but are
immediately reinvested back in the portfolio to enhance long-term growth.
All of the Satrix ETFs, other than Satrix Rafi ETF, pay out
any distributions on a quarterly basis (comprising the dividends received from
the underlying shares, interest and any other income that has accrued to the
portfolio in the preceding quarter).
The Satrix Fini, Satrix Indi and Satrix Resi ETFs on the
other hand offer sector specific equity exposure (although diversified in
These ETFs are accordingly appropriate if the investor wants
direct exposure to a specific industry sector, but which offers diversification
by holding a portfolio of shares, thereby mitigating the risk of holding single
Each of these sector ETFs holds the largest stocks in the
applicable sector by market capitalisation.
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