The ETF Investor

You can trade your view on the gold price with physically-backed gold ETFs, but what about gold miners, gold mining companies? What are the options available to ETF investors? The Satrix RESI ETF, tracking the FTSE/JSE Capped RESI10 Index offers an intriguing opportunity.

After a strong performance in 2024, the demand for gold has accelerated year-to-date, breaking records along the way, and flirting with the $3,000/oz level. What is driving this demand? As an investor in a gold ETF, where is my gold held? And how is its value determined?

2024 has been a stellar year for the ETP industry in South Africa. What stood out for us at ETFSA? Leading into another year of Trump, will it be a bump, or a dump? As ETF investors, we take insights from the past as we strive to thrive in 2025.

EasyETFs, new kid on the block as an ETF issuer, have joined the growing list of actively-managed ETFs on the JSE, but does this make things more complex, or “Easy” for investors? We also revisit its roots in Cloud Atlas and the closure of that chapter.

When one of the largest active fund managers in South Africa join the ETF industry, people take notice, and others ask questions. What's behind the Coronation strategy, and what's inside their range of AMETFs?

Traditional index-tracking ETFs require an index to track. So what if there is no index, like in the case of balanced funds, or multi-asset portfolios? The construct of an actively-managed ETF provides an ideal solution for simple, straightforward, strategic, static asset allocation strategies in a cost-effective, rules-based, transparent investment option, suitable for all investor types.

With the top of the global interest rate cycle in focus, we turn our attention to the outlook for listed property companies and REITs, and the range of exchange-traded product options available on the JSE. There is more to consider than just the interest rate cycle, and we investigate how active management can be applied in global property ETF investments.

Just when you thought factor-based investments have passed their sell-by date, a new South African ETF issuer has burst onto the scene with a multi-factor, style-based, risk-managed, actively-managed domestic equity ETF.

For many investors the term ETF is synonymous with index-tracking, or so-called “passive” investments, and the concept of an actively-managed ETF therefore represents a contradiction in terms. But the term “active management” does not necessarily mean lots of activity or significant tracking differences to the reference index, and it offers opportunities to manage index-referenced investments more efficiently.

FNB recently listed three new offshore ETFs, but the underlyings are very familiar to us – MSCI World, MSCI Emerging Markets and S&P 500. How do you choose between multiple ETF options when they offer the same – or very similar – underlying investment exposure?

Financial advisors play an important and valuable role in the wealth creation and preservation journey. But can you DIY at least some of it, and if so, where and how? The ETFSA Investor Hub is the perfect combination of digital-when-you-want-it, and human-when-you-need-it.

Factor- and style-based investment strategies continue to evolve and attract the attention of portfolio managers and analysts alike. But when an ETF Manco proposes the amalgamation of two of their factor-based ETFs into a vanilla, size-based ETF, the inevitable question arises about the future of factor investing.

There is so much more to investment on the stock exchange than buying shares in local companies, and the strong growth in bond ETFs are testimony to the attraction of a whole new world for investors. Whether you think “bonds are boring”, or “the bond market is the smartest in the world”, this discussion on actively-managed bond ETFs is bound to expand your horizons.

As central banks continue with the interest rate mantra of “higher-for-longer”, the uncertainty of the timing and speed of expected rate cuts present specific challenges for investors looking for stable and inflation-beating income. An active strategy through this period of volatility and uncertainty can offer specific benefits, but do you understand the additional risks this may bring?

There has been a sudden surge in interest in precious metal ETFs in recent months, especially in platinum. What is driving this demand? Why can only some banks, and no asset managers, be issuers of commodity ETPs? In addition to platinum, we cover gold, silver, palladium and rhodium in this podcast.

The options for income and yield in an investment portfolio continues to expand, and in this episode we feature two new ETFs available to investors for consideration. The JSE is also getting its first actively-managed ETF, decisively crossing the divide between index tracking and active management in exchange-traded products. There is no such thing as “passive” in investments.

The appeal of dividends in an investment strategy is well-known, and arguably timeless, but supplementing this strategy with share buybacks is perhaps less well-known, and certainly not one that has been easily accessible for retail investors. The range of investment strategies available through the Actively-Managed Certificate (AMC) wrapper, listed on the JSE, continues to expand, and now also allows for easy access to an enhanced yield strategy, combining dividends and share buybacks in one portfolio.

Liquid Private Credit in the US market is an investment opportunity not readily available to South African investors in any form other than an actively-managed certificate (AMC). Prior to the global financial crisis in 2008, most companies raised capital and financing by traditional means such as either banks or via public debt, but subsequent regulatory changes restricted the amount of bank lending to smaller and riskier businesses. In simple terms, that's where private credit stepped in to fill the gap thus created in the market.

“Diversification is the only free lunch in town”. This statement is famously attributed to Nobel laureate Harry Markowitz, and is often cited as your best defence against market risk. But what does diversification mean in practice, and how can we use ETFs to achieve this in a portfolio?

Commodities represent an investment opportunity that is quite different from the more traditional asset classes such as equities and bonds, but one that is arguably not as well understood, and often quite difficult to access. Considering the current global inflation backdrop, as well as the synchronicity of traditional asset class performance, now is a good time to look for sources of uncorrelated risk-adjusted returns, such as those offered by a diversified basket of commodity exposures.

One of the most universal investment objectives is the attractiveness of dividends, especially if this can be earned in addition to capital growth, and during times of increased uncertainty the value of dividends in support of total return become even more valuable. Given the high inflationary environment in which we find ourselves, with talks of a possible global recession thrown in, many investors are searching high and low for returns with the hope of preserving capital, especially in real terms.

ETFs, ETNs, AMCs – three-letter acronyms that all fall under the umbrella of ETPs (exchange-traded products). It all sounds complicated and can become quite confusing. As an investor, how do you know which ones to invest in, and should you be concerned about the specific product structure of the investment? Simply put, ETPs offer the ability to diversify your portfolio by being invested in a basket of shares across different sectors and geographies, or get exposure to hard to come by commodities. Actively Managed Certificates, or AMCs, are also considered ETPs, so it offers many of the same benefits, but there are also some pertinent differences.

Socially Responsible Investments, and specifically strategies designed to focus on Reduced Fossil Fuel, are to some extent a subset of a broader ESG focus on investment strategies. On the surface it ticks all the right boxes for retail and institutional investors alike. But what are some of the nuances of which investors should be aware, and how do you assess it for suitability in your investment portfolio, perhaps alongside exposure to physical commodities?

Inflation has risen sharply around the world due to the twin effects of very accommodative monetary policies and supply chain disruptions post Covid lockdowns, only to be compounded by the sharply higher energy and agricultural prices after the Russian invasion of Ukraine. Inflation-linked bonds represent a possible hedge against the impact of rising prices in both our lives as consumers, but also in our investment portfolios.

Investments in healthcare products and services have expanded in recent years to also focus on new technologies and disruptive innovations, as the combination of the Covid pandemic and increased longevity and ageing populations have caused a shift in this traditionally defensive sector. What does this shift towards biotechnology, breakthrough innovations in life sciences and genomics, remote diagnosis and surgical procedures, to name but a few, mean for the investment case for healthcare?

In his recently published book – The Bogle Effect – Eric Balchunas credits Jack Bogle, the father of index investing and founder of the Vanguard Group, with saving investors over one trillion dollars (and counting), thanks to the direct and indirect effects of lower investment costs. Although the low cost structures of index funds take much of the credit, it is the unique mutual ownership structure of Vanguard that serves as the catalyst for investors receiving all the benefits of lower fees.

China as an investment destination has challenged the most determined of investors in recent years. The long-term growth prospects and the importance of China in the global investment universe are well established, but the when, what and how to invest in China, remain key questions. The range of options available on the JSE continue to expand, and this latest offering from Sygnia Itrix focus on the “new sectors” in the Chinese economy. What are these, and how does it compare to the alternatives already available?

Investments in little-known companies, illusive strategies and futuristic concepts comes with very specific risks, especially in the short-term, but with the appropriate long-term perspective, and alongside more traditional investment options in your portfolio, these could offer diversified and excess performance to investors. Such options are now available via actively-managed funds, and specifically as exchange-traded products, as we await the introduction of AMETFs – Actively Managed Exchange-Traded Funds – on the JSE.

The annual SALTAs (SA Listed Tracker Awards) celebrate the achievements of ETP issuers in South Africa, and gives insight into measuring success for ETFs and ETNs - total return performance, tracking efficiency, capital raising, efficiency in trading, and the flagship People's Choice Award.

With an ever-growing range of exchange-traded products available on the JSE, ETF investors may find themselves overwhelmed with choice, and how to select a portfolio of ETFs that is consistent with their investment objective, risk tolerance, and time horizon. Model portfolios offer a solution to bridge this gap, but what are these, and how do they work?

Investments in emerging markets come in many different forms and until recently, exposure to India – the second-largest emerging market by GDP, and the 6th-largest on a global scale – could only be found as part of a broader emerging market ETF. The Satrix MSCI India Feeder ETF now allows for a more specific investment choice, but what is the current value proposition, and what exposure does it add to your portfolio?

From RMB to Ashburton and now FNB – what's in a name? We explore the recent changes for the former Ashburton ETFs and re-visit the full range of exchange-traded products options offered by the Firstrand Group under the “FNB” brand, many of which are unique on the JSE.

The idea to “own the market” by simply buying a Top 40 ETF has evolved over time, as first sector ETFs – financials, industrial, resources – and later factor-based ETFs, such as dividends, value and momentum – were added to the range. But until this week, ETF investors were not able to buy a single, broad-based JSE All Share index in ETF form. How have the broad-based market indices evolved over time to bring us to this point, and how should you think about “owning the market”?

“When will we get a Bitcoin ETF in South Africa”? This question is asked with remarkable regularity, especially whenever the prices of cryptocurrencies experience a strong run. So why have we not seen it in South Africa yet, despite several attempts by different ETF issuers? What are the regulatory constraints, and what needs to be put in place before this can become a reality?

Commodity ETFs, in some markets referred to as ETCs, derive their price entirely from the price of the underlying commodity, but physical commodities appear to have lost its lustre in recent weeks. Is this just a healthy pullback in a multi-year commodity super-cycle, or is there more to it? Most importantly, how can you invest in YOUR views using ETFs and ETNs?

Satrix recently listed its 22nd ETF on the JSE – a Global Infrastructure ETF. There is no doubt that the world is in desperate need of infrastructure investment, partly to replace old and outdated facilities, but also to build a “new” world that is fit-for-purpose. What is infrastructure? Why should you consider investing in it? What value can it bring to your investment portfolio?

ETFs and ETNs sound so similar, yet often the only thing they have in common, is that both are exchange-traded investment instruments. In a more recent development though, we now have ETFs that are wrapped in ETNs, thereby offering a combination of the two. How does this work in practise, what do you get when you buy one of these ETNs, and what is the difference between the so-called compo and quanto versions?

Diversification in investment portfolios has always been a powerful risk mitigator, but Satrix has taken this concept one step further, and applied it to an investment focus on companies that rate highly on inclusion and diversity in the workplace. In this episode, we explore the Satrix Inclusion and Diversity ETF, and how it may impact on investments.

In this episode we take a closer look at the Sygnia Itrix Solactive Healthcare 150 ETF, and the investment case for healthcare exposure in long-term investment portfolios. How does this compare to other global ETF options already available on the JSE, and how can you decide if it deserves a place in your wealth-building strategy?

Listed real estate investments have been under quite a bit of pressure over the last year or two, and the global lockdown due to Covid pandemic just added insult to injury. Even global real estate stocks, although arguably more diversified than local investments, were weighed down by the strength in the rand which has appreciated more than 20% against the US dollar over the past year. But not all real estate indices are created equally, and in this industry, forced to adapt very quickly, there is a case to be made for indices that are also more responsive to change. What are custom indices and how do they work?

The returns we get from investments come in two parts – capital gains (or an increase in the price) and distributions, which could be either dividends or interest. It is easy to see the first part of this return equation, the price changes, from your investment platform or stockbroking account, but how do distributions work for ETFs?

Investors are often told to “do your homework”, to “understand what you invest in before you do so”, or even just “do your own research”, but what exactly does that mean, and how should ETF investors evaluate an ETF to decide if it's right for you? In this episode we take a closer look at fact sheets, how to read it and identify the important information to help guide your investment decisions.

In this episode we turn our attention to an asset class that is at best not well understood by most investors, or at worst, a complete unknown, and that is African sovereign bond markets. We also discuss the ballot process required to change the investment strategy of an existing ETF.

In this episode we metaphorically dust off our passports to embark on a round-the-world-trip, through a quick reminder of the global ETF investment opportunity set available to South African investors on the JSE, in general, and then taking a closer look at the latest offering in this space, the CoreShares Total World Stock Feeder ETF (share code: GLOBAL).

In this episode we follow on with the theme of episode 20, being ESG ETF investments, by looking at the specific options available to South African investors on the JSE. Sygnia recently listed the third ESG ETF on the JSE – the Sygnia Itrix S&P Global 1200 ESG ETF. How does this differ from the other two options already available?

In this episode we focus on ESG investments, as in Environmental, Social and Governance, and how to get exposure to this strongly growing global trend via ETFs. But what is ESG, other than the clarification of the acronym, and why should you care? Is this a trend that is easily captured in index form, and therefore through an ETF, or is this best left to active investment management?

In this episode, the final one for 2020, we finish off with a nice Christmas bonus for investors in Tesla. The electric vehicle company will be included in the S&P500 index from the start of trading on Monday 21-Dec-2020. We discuss why now, and what this means for investors in S&P500 ETFs.

In this episode we are going back to basics to answer some of the most frequently asked questions. Having said that, even if you are an old hand at ETFs, there may be some new insights for you in this episode, such as investing in cryptocurrencies via ETFs.

In this episode we celebrate the 20th birthday of the ETF industry in South Africa, which was born on the 27th of November 2000 when the Satrix 40 ETF was listed on the Johannesburg Stock Exchange. Since then, the industry has seen many firsts, remarkable growth, and broadening opportunity through both the breadth and the depth of the range of products, ETF issuers, investor types and investment strategies that can be accessed via Exchange-Traded Funds.

In this episode we focus on global bond ETFs, and specifically the six options available on the JSE. This is not intended to be a look at the value proposition of investing in global bonds, but rather a comparative look at the different options, how they differ, and where they are similar.

In this episode we focus on gold investments, and how gold ETFs in particular, give you easy and safe access to the yellow metal whose perceived value dates back at least to Biblical times. For South Africa as a country, an economy, and indeed, a stock market which was built on gold, this is fundamental. Add to this its performance in 2020, and you'll see why this topic is so important and relevant. We also explore the debenture structure, and how it is different from a CIS - a unit trust.