Fin24

Which ETF is best for me?

2011-07-12 09:10

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:

The 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.
 
This 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.
 
The 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.  

This ETF 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%
Cash                               10%
 
This will produce a lower average return than the Satrix Divi, but at less risk and greater diversification to other asset classes.  

- Fin24
 

Comments
  • Hene - 2011-07-14 11:09

    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?

  • marcusvandermerwe - 2011-07-21 06:03

    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.

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