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 In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price. 'Saving' is not the same More career.
We feature this ETF every two years. Keeping an eye on An index is a tool we can use to measure movement over time. In the stock market, we use indices to track the performance of a selection of listed companies. This could include all the companies listed on the market, or all the companies in a certain sector. In inflation, we use an index to track the price of certain More 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 When a company or product is listed, you can buy and sell its shares on a stock exchange like the JSE. Listing on a stock exchange makes it possible for members of the public to invest in a company using the infrastructure provided by the exchange and its brokers instead of going directly to the company to buy shares. These More on the JSE by Market capitalisation refers to the size of a company within a market. It is determined by multiplying the number of shares the company issued on the exchange (which is the market) by the current share price. This metric is often used when putting together an index. Companies with a higher market capitalisation take up more space in the index. More. We determine market capitalisation by multiplying the company’s share price by how many of that company’s shares are traded on the stock market. When 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|
|Issue date||27 November 2000|
|The total expense ratio (TER) is the measure used to determine how much it costs to run an ETF. Your ETF return is whatever the market delivers minus the cost of running the ETF. We only know the exact TER at the end of a period (usually a year), because even if the issuer can predict its costs exactly, it||0.1%|
|ETF Benchmark||FTSE/JSE Top 40|
|Tax-free savings account||Investment allowed|
|ETF major holdings||View the full list here.|
|Performance 1 year||+5.0%|
|Performance 5 years||+13.4%|
|Performance 10 years||+91.0%|