Gives investors exposure to SA companies with offshore listings

Satrix, South Africa's leading provider of index-tracking products, will list a new exchange traded fund (ETF)  during the first quarter of 2024, upon approval from the JSE. The Satrix JSE Global Equity ETF (STXJGE) will give investors an equity building block that upweights local companies that have their primary listings offshore. It will track the FTSE/JSE Global Investor Index.

Kingsley Williams, Chief Investment Officer at Satrix*, says "This new fund represents a shift in investment strategy, catering to the market's evolving needs. It will provide an alternative option for investors who want to diversify their local equity portfolios and incorporate higher exposure towards rand hedge stocks, particularly in light of the upcoming harmonisation of the FTSE/JSE benchmark indices (ALSI and SWIX) in March 2024.

He said over the past few years local equity indices using the All Share Index (ALSI) construction methodology have significantly reduced exposure to inward-listed global companies such as BHP Group (BHG), Compagnie Financiere Richemont (CFR), Glencore (GLN), Prosus (PRX), and Anheuser-Busch InBev (ANH), due to a combination of corporate actions, restructuring and index rules resulting in substantially reduced floats.

“This has exposed these equity indices more to local macroeconomic idiosyncrasies (often referred to as SA Inc. factors), which clients may wish to diversify away from within their local equity exposure.”

“Investors can blend the Satrix JSE Global Equity ETF with existing ETFs to gain increased exposure to dual-listed companies on the JSE, as historically offered by the ALSI indices.”

Rand Hedge and Offshore Revenue Exposure

“The new ETF has a significantly higher rand hedge profile than other broad local equity market indices, providing a potential cushion should the local currency weaken. It also offers a diversified source of revenue from its constituents, with higher earnings emanating from offshore markets across a variety of sectors. That makes it ideal for investors with a longer-term investment horizon who can withstand equity-like volatility,” adds Williams.

Blending Local Equity Exposure With Global Investment Appeal

Satrix says the Satrix JSE Global Equity ETF tracks the recently launched FTSE/JSE Global Investor Index, focusing on the 50 largest companies listed on the JSE. This approach diverges from broad local equity benchmark indices by using global free-float metrics for weight determination. Local equity benchmark indices typically reduce the weight of dual-listed companies, by only considering the proportion of shares held locally.

Key Features of this ETF include:

Diverse portfolio: Targets the 50 largest JSE-listed companies.Global free-float weighting: Uses global free-float metrics, offering higher exposure to dual-listed companies.Quarterly rebalancing: Ensures the ETF stays current with market changes.Competitive TER: An attractive Total Expense Ratio (TER) of 0.15% makes it an affordable option for a diverse range of investors.Easy access: The ETF will be available for trading on the JSE, making it accessible for a variety of investment applications.

Visit www.satrix.co.za for more information on the Satrix JSE Global Equity.

*Satrix is a division of Sanlam Investment Management.