ETF: Understanding the SYGUK ETF

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Back in 2016, the Sygnia iTrix FTSE 100 was one of Nerina Visser‘s preferred ETFs. The FTSE 100 index tracks 100 companies listed in London. At the time the world was a hot mess. The United Kingdom had just voted to leave the European Union. Deutsche Bank, who issued the FTSE 100 ETF until then, was in the news for possibly being insolvent. Since then the db-X range was acquired by South African asset management firm Sygnia

We love ETFs because they remain largely unaffected by the madness around us. Within a market, companies that perform poorly are booted out of the index and replaced by companies that perform well. Should an ETF issuer struggle, the ETF units are underpinned by actual shares in the name of shareholders. These shares can be transferred between issuers with a minimum amount of fuss. Those of us who held Deutsche Bank’s X-trackers at the time of the Sygnia acquisition were largely unaffected by the change of ownership. The ETFs continued on as before. 

As the name implies, the ETF invests in the 100 biggest companies listed on the London Stock Exchange. It’s weighted by market capitalisation and will give you exposure to 81% of the UK market. The fund currency is British Pound (GBP), making this ETF a convenient option for South Africans who want exposure to that currency. 

Weekly expert: Keith Mclachlan

What sets this ETF apart from other, similar ETFs?

Nothing. This is a vanilla index exposure to blue chip UK-listed companies. Currently, its major holdings are across financial, energy and consumer staples, such as the market cap weightings of the UK’s FTSE 100 index exist. Given that most (if not all) of these companies are multi-nationals, this isn’t even really a GBP-exposed ETF. It is largely just another blue chip, market cap weighted ETF option.

What limitations should investors be aware of?

All market cap weighted ETFs have a momentum element to their strategy. This one is no different.

What type of portfolio would benefit most from holding this ETF?

Those that do not have any exposure to major, multinational, blue chip equities.

Unpacking the SYGUK

ETF name Sygnia iTrix FTSE 100
ETF issuer Sygnia
Issue date 10 October 2005
TER* 0.86%
ETF benchmark FTSE 100
Tax-free savings account Investment allowed
ETF major holdings View all 100 companies in the DBXUK here
Market cap* R989m
Performance* 1 year +9.3

3 year +10.6%

Dividends*  3.85%
What we like This ETF is the best option for local investors who believe that the UK is the world’s next big investment opportunity.

*April 2019