ETF: Understanding the Satrix 40

Kristia van HeerdenETF Blog, Latest

The Satrix 40 (share code: STX40) turns 20 years old this week. As South African as pap en wors, this stalwart shows no signs of slowing down. At a total expense ratio (TER) of 0.1% per year, there is no easier and more affordable way to start an investment career.

We feature this ETF every two years. Keeping an eye on index changes is a great way to get a sense of what’s happening in the local market. For beginners, it’s a wonderful tool to internalise the workings of an ETF.

When we originally featured the STX40 ETF in February 2016, SABMiller and Steinhoff were both in the index. Watching these companies fall out of the index has given us an opportunity to witness major rebalancing efforts. Those who held the STX40 during these transitions can attest to a painless process not shared by those who held the individual shares. Satrix also launched the SatrixNOW platform, making buying and selling this ETF cheaper and easier than ever before. Winner of the People’s Choice Award at the South African Listed Tracker Funds Awards for three years running, it’s an ETF we love to love.

TIP: Not entirely sure what an ETF is or what it has to do with you? We explain it all here.

As the name suggests, the Satrix Top 40 tracks the performance of the 40 biggest companies listed on the JSE by market capitalisationWe determine market capitalisation by multiplying the company’s share price by how many of that company’s shares are traded on the stock marketWhen you buy the Satrix Top 40 ETF, you make money when the bigger companies in the index do well. Sadly you’re also along for the ride when those same companies do poorly. We explain that here

The presence of Naspers in the index has made for exciting ETF watching. Its presence in the Top 40 provides a case study to see how different market and company events affect an ETF.

When we first featured this ETF in 2016, Naspers was the second-biggest company in the index, representing 13.97% of the ETF. It took the top spot when SABMiller fell out of the index after being absorbed by AB InBev. Two years later, in 2018, Naspers took up nearly a quarter of the index at 23.15%. Since then, Naspers has unbundled MultiChoice and Prosus. Both of these companies are now listed separately and are included in the Top 40 index. While Naspers no longer holds a stake in MultiChoice, it is still a shareholder in Prosus. Even without these businesses, Naspers still takes up a mammoth 21.74% of the index. The loss of the biggest listed company on the index and two major unbundling efforts have had little effect on the experience of the Top 40 shareholder. Therein lies the beauty of ETF investment.

The weighting of the Satrix 40 gives you pure exposure to the performance of the companies listed on the JSE. It takes no bets on future winners and makes no attempts to protect investors from the price movement of its biggest holdings. That said, investing in 40 companies instead of just a few individual shares provides stability to make the investment journey slightly smoother. It keeps investors where they money is – index investing at its purest.

ETF name Satrix 40 ETF
JSE code STX40
ETF issuer Satrix
Issue date 27 November 2000
Total expense ratio 0.1%
ETF Benchmark FTSE/JSE Top 40
Tax-free savings account Investment allowed
ETF major holdings View the full list here.
Market cap R8.7bn
Performance 1 year +5.0%
Performance 5 years +13.4%
Performance 10 years +91.0%
Dividend yield 2.4%

*November 2020

ETF blog

ETF blog logoAt 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.