In February 2017, Satrix introduced its first property ETF, the STXPRO. The ETF tracks the S&P SA Composite Property Capped Index. For years, CoreShares dominated the property space with the Proptrax TEN and the Proptrax SAPY. However, later this year, CoreShares will likely merge these two ETFs and change the methodology. The new CoreShares ETF will be a direct competitor to the STXPRO, so let’s see what’s under the hood.
The S&P SA Composite Property index is weighted by market capitalisation, but allocation is capped at 10% to prevent a single share from distorting the performance of the index. The majority of JSE-listed companies currently represented in the index are diversified real estate investment trusts (REITs) like Growthpoint. Retail and office REITs and real estate operating companies are also represented.
NEPI Rockcastle, currently the biggest constituent in the ETF, owns and manages properties in Romania, Poland, Slovakia, Croatia, Bulgaria, Hungary, Czech Republic, Serbia and Lithuania. Growthpoint, second on the list in terms of size, holds sizeable investments in Australia and Poland, in addition to its South African holdings. As a result, this ETF offers global exposure via companies managed and operated in South Africa.
Real estate investments are typically favoured for their yields, and this one is no different. Since inception, this ETF has paid 7.3% in income to shareholders. It’s worth remembering income from real estate investment trusts is taxed as income, not dividends. Outside of a tax-free investment space, the tax burden could be significantly heavier than the 20% dividend withholding tax. Be mindful of this when considering property ETFs. This ETF distributes dividends in March, June, September and December.
In terms of performance, the ETF hasn’t shot the lights out, but neither has anything else over the past five years. According to Stanlib’s Keillen Ndlovu, this means property investments are very cheap at the moment.
The product’s total expense ratio is 0.29%, including VAT, making it a very cheap property play.
Under the hood
|ETF name||Satrix Property|
|ETF JSE code||STXPRO|
|Index tracked||S&P SA Composite Property Capped Index|
|Methodology||Weighted by market capitalisation, capped at 10% per share|
|Holdings||View the full list here.|
|Returns||1 year -18.1%
Since inception -27.8%
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