Which ETF is best for me?
A Fin24 reader writes:
I am 45 and want to invest in the
Satrix Divi. I have R300 a month to invest. What other exchange-traded
funds (ETFs) could I consider?
Mike Brown, managing director of the exchange-traded fund platform etfSA.co.za, responds:
Satrix Divi provides exposure to a portfolio of 30 shares chosen by the
JSE, on the criteria of their superior future dividend paying
potential. The JSE uses the consensus forecast of the investment
industry analysts to identify 30 out of the top 100 shares on the JSE
with the best forecasted dividend returns for the next year.
portfolio not only provides a good dividend yield - which can be
automatically reinvested through an investment plan platform - but the
shares that pay good dividends would be rerated by the market and so it
provides the potential for superior capital gain returns.
Satrix Divi ETF has been the best-performing equity collective
investment scheme (which includes unit trusts and ETFs) for the past
three years. According to the Profile Funds Data Survey of all unit
trusts and ETFs, the Satrix Divi has provided a total return over the
past three years to June 30 2011 of 81.34%.
The next best fund,
the Marriot Dividend Growth Fund, has grown by 76.27% and the third
best, the Nedbank Investments Financial Fund, by 68.70%. This gives the
Satrix Divi a clear lead in the performance stakes for funds available
to the retail public in South Africa.
Should the reader wish
to look at a lower risk ETF, he or she could consider the new MAPPS
Protect Index ETF, recently launched by Absa Capital.
provides asset diversification benefits and low risk exposure to
different asset classes by a defined asset allocation strategy. It
allocates the portfolio as follows:
Domestic equities 40%
SA government bonds 15%
Inflation-linked bonds 35%
will produce a lower average return than the Satrix Divi, but at less
risk and greater diversification to other asset classes.
I have several Satrix funds and I am satisfied with their performance, particularly Divi. I plan to increase, but wonder whether Coronat shares which pay a higher dividend and capital growth is not a better option?
I also agree that Coronation is a better performing ETF. The initial lump sum and minmum monthly payments is a bit more than SATRIX though.