ETF: Understanding the Ashburton Top40

Investing in South Africa’s 40 biggest companies is a wonderful first step if you’re just starting out. By investing in the 40 biggest companies listed on the JSE, you get exposure to different sectors and even asset classes through listed property companies. The Ashburton Top40 ETF gives you a chance to do all of that on the cheap.

TIP: We explain what a stock market is and why different sectors and asset classes matter here.

Like its competitor, the Satrix Top40, this ETF tracks the FTSE/JSE Top40 Index and is weighted by market capitalisation.

TIP: We discuss why ETF weightings matter here.

Almost 60% of the 40 biggest companies listed on the JSE do business outside of South Africa’s borders. The fact that they make money in different countries means they are not as exposed to local economic and political conditions. For example, should inflation rise so much in South Africa that the average citizen can no longer afford more luxurious products, companies that supply luxurious products can still make money in countries where rising costs aren’t putting pressure on households.

If all this sounds very familiar, it’s because the Ashburton Top40 ETF is by no means the only ETF in the market that can give you exposure to the 40 biggest companies. Fortunately for us, more than one product that does the same thing means we can choose which product will better fit our pockets.

Weekly expert: Warren Ingram

This week Warren Ingram from Galileo Capital helps us understand what sets the Ashburton Top40 ETF apart from competing products that don’t seem all that different.

What sets this ETF apart from other ETFs in the market?

The Ashburton Top40 ETF is one of the lowest cost equity ETFs in South Africa with a total investment cost of 0.2% per year. For an index tracker, fees are a massive issue to consider and so this must rank as one of the top equity ETFs in the market.

What limitations should investors be aware of?

None, it is a normal Top 40 tracker and therefore it carries normal stock market risks.

What type of portfolio would most benefit from holding this ETF?

Someone who wants to invest for the long term and is looking for maximum capital growth. It is an ideal compliment to a global equity ETF.

Unpacking the Ashburton Top40

ETF name	Ashburton Top40 ETF
JSE code	ASHT40
ETF issuer	Ashburton Fund Managers
Issue date	16 October 2008
Total Investment Cost*	0.2%
ETF benchmark	FTSE/JSE Top40 Index
Tax-free savings account	Investment allowed
ETF major holdings	Naspers, BHP Billiton, Richemont, Anglo American, Sasol Limited, Standard Bank, Firstrand, British American Tobacco, MTN, Old Mutual. View the full list here.
Market cap*	R1.78bn
Performance	1 year -17.1% 3 year +2.7% 5 year +13.0% 10 year +126.1%
Dividends*	2.6%
What we like	Investing on the cheap is something that always excites us. The fact that there are two Top 40 products in the market under 0.25% is great for the investor.