ETF: Understanding the SYGWD

In ETF Blog, Latest by Kristia van Heerden

The Deutsche Bank x-tracker products were acquired by Sygnia in 2017. While the product is still the same, the name changed to Sygnia Itrix MSCI World (SYGWD).

DBXWDWhen the South African economy struggles to grow, so do your local investments. Luckily you don’t need a fancy international investment account or dollars to invest in other countries. This week, we explain how the SYGWD ETF can turn you into an international investor in a flash.

Investing in SYGWD

Syngia has a number of ETFs that are invested in different countries. Today we are dealing with the MSCI World Index ETF, which is often referred to by its JSE code, SYGWD. This ETF is one of three world-wide ETFs that will unlock international investing from our sunny shores. This ETF diversifies by investing in different companies and in 23 different countries.

TIP: Click here if you’re not entirely sure what diversification means or why it matters.

While the MSCI index tracks over 1 600 companies, this ETF only invests in the top 1 000 companies on the index for the sake of liquidity. American companies like Apple and Facebook make up 58% of this ETF. However, it is also invested in countries like Australia, Germany, Switzerland, Canada, France, the United Kingdom and Japan. You’ll notice that all of these countries have relatively stable economies, and that is exactly the point.

When our local economy takes a blow due to, say, having three finance ministers in four days, these countries carry on unperturbed. When you find yourself paying a lot more for every dollar, more than half the companies in this ETF earn dollars. Your Top 40 ETF could be doing very poorly indeed, while your SYGWD continues to make you money.

Of course, the opposite is also true. In addition to being the year that Sex on Fire was released, 2008 also saw the American and world economy fall flat on its face. The South African economy continued to grow during that time, albeit very slowly. If you had spread your investments between countries as well as companies and sectors, you would have been better off than if you had fewer investments.

The best part is that you can buy this ETF exactly where you buy your Top 40 ETF – through your broker. You don’t need to convert your rands into a different currency and you don’t need to do the tedious paperwork of opening an offshore account. Better yet, you can invest in this ETF through your tax-free savings account.

TIP: Click here if you’re wondering what exactly a broker is.

Weekly expert: Mike Brown

Every week we ask an independent expert to explain what differentiates the featured ETF from all others, what limitations to be aware of and what type of portfolio would most benefit from holding the featured ETF. Mike Brown from tells us what he thinks about the SYGWD.

What differentiates the SYGWD ETF from other ETF products?

This ETF offers the opportunity to invest in the major global stock markets. It gives the investor the opportunity to own a little bit of every main listed company across all the developed economies. The ETF is a pure rand hedge, as it trades in rands on the JSE, but offers direct exposure to a global portfolio of equities. 

It is listed as an “inward investment” on the JSE. This means that it’s classified as a rand denominated investment, even though it offers a portfolio of only international equity assets. The inward investment categorisation ensures that there are no foreign exchange control restrictions or allowances required, nor any tax clearances for individuals, trusts or corporate investors to invest as much as they wish.

What limitations should investors be aware of?

The allocation to different countries in the Sygnia MSCI World portfolio is based on market capitalisation, liquidity and free float considerations.  This results in 59% of the portfolio allocated to the USA, followed by 12% in Europe, 8% to the United Kingdom, 9% to Japan and the balance to other developing nations, such as Canada, Australia and New Zealand. This asset allocation may not necessarily suit all investors, but does reflect the reality of global markets.  There is no allocation to emerging nations such as China and other Asian nations. 

What type of portfolio would benefit from holding the SYGWD?

This product is very suitable for investors seeking an exposure to global equity markets as it has wide diversification, comprehensive exposure to all economic and industrial sectors and is extremely tradable.  

For investors looking to have a single exposure to global equity markets, the Sygnia MSCI World ETF is ideal, and it is also excellent as the core in diversification balanced portfolios. 

SYGWD unpacked

ETF name Sygnia Itrix MSCI World ETF
ETF issuer Sygnia
Issue date 1 April 2008
ETF TER* 0.86%
ETF benchmark MSCI World Index
Tax-free savings account? Yes, can be included.
ETF major holdings Apple, Microsoft, Exxon Mobil, Johnson & Johnson, General Electric, Facebook, Wells Fargo & Co, Alphabet Inc, Nestle,
Market cap* R3.2bn
Performance* 1 year +13.9%

3 year +89.7%

5 year +143.5%

Dividends Paid twice a year.

Last 12 month dividend yield = 1.51%*

What we like You can own the biggest companies in the world from the comfort of your own, local broker.

*As at close 23 February 2016

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