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Investing in six Satrix funds

May 27 2015 16:04

A Fin24 user wants to know if it is a good thing for him to invest in six different Satrix funds. He writes:

I have been investing in six Satrix funds since November 2007 - at the time R300 per fund.

Presently I invest R7 000 between the six and the present amount invested is about R420 000.

I am aware you are without a lot of info about me, but would you advise that I stay in my present situation for another three years? Is investing in six funds a good thing?

READ: Investing R3 000 in ETFs

Mike Brown of etfSA responds:

Regular debit order investments in a portfolio of Collective Investment Schemes (ETFs or unit trusts) are always a good long-term investment strategy.

You have reaped the benefits of growing your investment to R420 000 over a seven and a half year period by recurring debit order contributions.

Utilising Satrix ETFs for such an investment is a sound strategy in many regards. However, Satrix ETFs only cover South African equity indices, so you are purely focused on one asset class.  

A diversified investment strategy would normally look to spreading a debit order investment into bonds, listed property, offshore equities and variable interest rate instruments.

Satrix does not issue any ETFs for these other asset classes, but amongst the 45 ETFs which are now listed on the JSE, there are low cost ETFs that cover foreign equities, fixed income bonds, inflation-linked bonds, variable interest rates (preference shares), listed property shares and other investment options.

You should probably consider investing in some of these other ETFs rather than purely having all your “eggs in one basket” by only investing in South African equity indices with Satrix.

While Satrix does not offer ETFs to cover these other asset classes, it does have index tracking unit trusts that offer exposure to these separate asset classes and market returns.

You might approach Satrix to see if its debit order investments can be allocated to such unit trusts as well as ETFs.

READ: Unit trusts vs ETFs

Another option
Another option would be to use a full service ETF transaction platform, like the etfSA Investor Plan, that offers access to all South African listed ETFs, including the Satrix products, for debit order investments - from R300 per fund - or lump sums from R1 000 per fund.

Looking to diversify your portfolio would give you greater protection, in case of an equity market downturn in South Africa, but would also increase long-term investment performance potential.

ALSO READ: Comparing shares, unit trusts and ETFs

Disclaimer: Fin24 cannot be held liable for any decisions made based on the advice given by debt experts. 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.

investments  |  etfs  |  money  |  money clinic


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