In a first for the local exchange, Satrix is launching a Capped All Share Exchange Traded Fund (ETF) that will include the large cap stocks as well as some mid and small-cap stocks on the ETF. Weighting within the index will be capped at 10%, reducing the influence of some of the very large stocks.
The small-cap part will excite many, but in reality, there are a few shares included with a market cap of under R5billion, that are also in the small-cap index such as Libstar, City Lodge and Grindrod. But not small caps in how many will consider them in the under R1billion market cap space. Overall small and mid-cap stocks will make up some 25% of the ETF.
That all said, this is a great broad market ETF for those looking for local exposure but don’t expect the returns to be very different from the popular Top40 index. The chart below compares the All Share capped total return (dividends reinvested) in white vs. the Top40 total return, and the difference in return is tiny.
Capped All Share (White) vs. Top40 (yellow). Both total return
As such with the STX40 tracking the Top 40 at a TER of 0.1% that will remain my preferred broad market ETF for the SA market.
Satrix is also sponsoring the costs for six months, so no TER will be charged until June 2022.
ETF Details
- IPO date: 18 -29 October 2021
- JSE listing: 10 November 2021
- JSE code: STXCAL
- Target TER: 0.25% VAT inclusive (Effective from 1 June 2022, no TER till then)
- Dividends: Feb, Apr, Jun, Aug, Oct & Dec each year
- Tax-free: Allowed
- Number of shares at listing: 139
Thoughts
The STX40 has a lower TER for the same(ish) returns, so I’ll stick with my STX40.
Simon
ETF blog
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.