The Satrix FINI ETF (STXFIN*) tracks 15 locally listed financial companies, including all of South Africa’s major banks, life insurance providers and real estate investment trusts (REITs).
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.|