Twenty-four years ago today the first ETF was listed on the JSE, The Satrix 40 (JSE code: STX40*) at a price of 774c.

The IPO process was huge and as I recall a couple billion Rands was applied for with almost 4million trading on the first day. I hadn’t heard of ETFs before but a friend convinced me that they were great and I applied in the IPO and still hold having never sold any of my Satrix 40 ETFs,

At a current price of just 7700c your initial investment is almost 10x higher. But here’s the really wild fact, you’ve received just over 2450c in dividends giving a total value for a buyer on that first day of R101.50 in value for that initial 774c purchase.

This is an annualised return of 11.3%. By comparison the S&P500 has returned just under 8% annualised over the same period.

Returns in both examples would of course be even higher assuming you reinvested the dividends received rather then spend them.

The key point is that the launch of this ETF introduced the concept of passive investing to South Africans which has not only offered great returns, but also low fees. The low ETF fees have also seen other CIS instruments such as unit trust markedly lower their fees, saving everybody a bunch.

Satrix 40 | Top 10 holdings | 30 September 2024

Simon Brown

* I hold ungeared positions.

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.