Sygnia hanging two tech ETFs | DALL E 3
Two Sygnia Itrix tech focused ETFs are under going changes and one needs your vote to be approved.
Sygnia Itrix 4th Industrial Revolution Global Equity ETF (SYG4IR) to become an active ETF
The change here is significant and hence requires a vote by holders of the ETF.
Currently this is a passive ETF tracking the Kensho New Economies Index and Sygnia Itrix want this to become active. The stated reason is as below;
“a complex rule based weighting algorithm that results in small and unprofitable companies being over- represented in the index and these companies tend to cyclically underperform in times of high interest rates. Changing the fund to an actively managed ETF means Sygnia would have more flexibility to vary the weights to companies across economic cycles.”
This index construct has always been a wild idea and returns have been disappointing relative to the other tech focused ETFs on the JSE. Whether becoming active will improve returns remains to be seen, but Sygnia Itrix certainly thinks it will.
The new underlying index will be the Solactive GBS United States 500 Index which is very much the S&P500, but Sygnia will keep it more tech focused and state “he portfolio will focus on selecting global companies which have exposure to new technologies and innovations which have the potential to transform the global economy across a broad range of sectors.”.
If you currently hold the ETF you need to notify your broker or vote directly (check the SENS for details) whether you approve the change or not, the deadline is 27 May 2024.
- If 25% of holders vote and the majority approves the changes will be effective 19 June 2024.
- If 25% of holders vote and at the majority rejects the changes, then no change.
- If less then 25% of holders vote, then a second vote is held with no minimum required and the majority decision will hold.
TER will remain unchanged.
This has always been an ETF I struggled with, sure the concept is great but perhaps the key point is two-fold. What really is the 4th Industrial Revolution? And notice how the concept has faded away with nobody talking about it any more as AI has taken the focus? Further, overall I prefer more generic broad ETFs with less attempt at catching a current exciting trend and as such my preferred tech ETF has long been the ETF5IT from 1nvest that has delivered markedly better returns.
Sygnia Itrix FANG.AI Actively Managed ETF (SYFANG)
The change here is to the TER being charged. Currently it is 0.7% plus a performance fee. The change is a flat 1.15% TER with no performance fee and this means it will be eligible to be included in tax-free accounts.
The change here will be effective 1 August 2024 and does not require a vote.
When this ETF was listed I bemoaned the performance fee as it meant it could not be included in tax-free accounts. Now you can, but instead you get a high TER. Again I also am not a fan of niche hyped ETFs, but if fang and AI is your thing, here’s your ETF.
ETF blog
At Just One Lap, we are big fans of passive investment using ETFs. In this weekly blog, we discuss ETFs on the local market and the factors you need to consider when choosing an ETF. If you have wondered how one ETF differs from another, this is where you can find out. We explain which index each ETF tracks, what type of portfolio could benefit from holding each ETF, and how the costs will affect your bottom line.
