For the longest time South African index investors seeking global exposure were limited to the Deutsche Bank x-trackers. Luckily for investors, 2017 seems to be the year for offshore ETFs. In addition to the two CoreShares ETFs, which listed last year, and the Satrix MSCI ETFs, the JSE will see dozens of new offshore index-tracking product listings before the year is out.
The Satrix MSCI World ETF is one such happy addition to the market. The ETF invests in 23 developed markets around the world – a welcome refuge for the South African investor with news fatigue. A third of the ETF is invested in financial and information technology companies in regions like the United States and Europe. A whopping 1651 companies are represented in this ETF.
The ETF’s nearly 60% exposure to the USA makes it appealing to investors interested in global household names like Apple, Microsoft and Amazon. However, its exposure in 22 regions outside of the US ensures that weightings in companies listed in other regions can compensate should American companies start to struggle to conduct business in the rest of the world. Property lovers would be glad to hear that 3.19% of the index is invested in global real estate.
While the investment is made rands, the ETF is denominated in US dollars, offering opportunities to capitalise on currency movements. In addition to 59.51% exposure to the dollar, the ETF also has 12% exposure to the Euro and 8.61% exposure to the Japanese Yen.
The greatest news is that the expected TER for this ETF is only 0.35% per year, making it the cheapest ETF with worldwide exposure around.
|ETF name||Satrix MSCI World ETF|
|Issue date||25 July 2017|
|ETF benchmark||MSCI World (Developed Market) Index|
|Tax-free savings account||Investment allowed|
|ETF major holdings||Apple, Microsoft, Facebook, Amazon, Johnson & Johnson, JP Morgan Chase & co, Exxon, Alphabet, Nestlé. Download a full list here. https://www.ishares.com/uk/individual/en/products/251882/ishares-msci-world-ucits-etf-acc-fund|
|Performance||Since listing +0.76%|
|What we like||Global exposure, compensating for local political instability and slow growth, dollar exposure and worldwide exposure, reducing regional risk.|
*Since TER is reported at the end of the period based on true costs, the exact TER will only be known at the end of the first year
**This is a total return index, which means the dividends are reinvested on your behalf. Sadly, you still pay dividend tax.
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