The FINI is weighted by market capitalisation and currently offers ±70% exposure to banks. South Africa’s banking sector is admired worldwide for its efficiency and fairness. This ETF is a great way to capitalise on the sector’s reputation. However, investors who already hold top 40 positions should be wary of over-exposure to the sector. The biggest holdings in the Satrix FINI also represent a significant holding in the top 10 constituents of the top 40 index.
This ETF is also a bit odd as it includes three property stocks; Growthpoint, Redefine and Nepi Rockcastle. I actually like this as these are three of the better local REITs with Nepi focusing on Eastern Europe so earning in Euros and in different geography.
Usually, a generous dividend payer the pandemic saw banks not declaring dividends in 2020 and so the dividend yield dropped but it has recovered to the tradational +3%.
It is important to remember that a sector-specific ETF is likely to be more susceptible to volatility during certain periods. It’s advisable to buy this ETF as part of an overall ETF strategy that includes broad-market exposure to reduce sector-specific risks.
Perhaps best of all this ETF is green so far in 2022 when not much else is and I am holding it in my tax-free account.
Unpacking the Satrix FINI ETF (data as of 22 November 2022)
|ETF name||Satrix FINI|
|Issue date||8 February 2002|
|ETF benchmark||FTSE/JSE Financial 15 index|
|Tax-free savings||Investment allowed|
|Performance||1 year +13.5%
3 year -0.9%
5 year +0.5%
10 year +53.4%
|What we like||South Africa’s financial services sector is respected the world over. This ETF is an easy way to capitalise on that reputation.|