Satrix to change shape

Making the announcement at a briefing at the JSE today (6 Feb.), Mike Brown, newly appointed first full time employee of Satrix, says that the Satrix Exchange Traded Fund (ETF) applied to the FSB in November to convert to a collective investment scheme.

"We are hopeful that we will get approval soon," says Brown. JSE president Russell Loubser says that the process is fairly technical although he is confident that approval will be forthcoming.

"We have a good working relationship with our regulator, and there has been an open flow of communication in this regard."

In terms of the ETF it will be in direct competition with asset managers for pension fund money, as confirmed by Brown and Ben Meyer, the product and market development manager in the listings division at the JSE.

Meyer concedes that there will be some level of disintermediation of asset managers, as Brown will focus on the institutional side of the business. "We have been talking directly to pension funds."

The move is seen as an attempt to get more market share as pension funds are only allowed to invest 5% of funds into the 'other' products category. By converting to a CIS they (Satrix) would theoretically be able to target the 75% asset allocation market.

In terms of attracting the retail investors, there are plans afoot to make the product available through the SA post office.

Added to which Meyer confirmed that brokers are seen as an important market and there is commission payable for those that put their clients into Satrix.

On the question of retail investors in the current offering, the Collective Investment Schemes Control Act specifies that current investors have to be canvassed and vote on a move or otherwise.

Meyer: "We have spoken to the main institutional investors in Satrix ETF, who account for 85% of the number of investors and they on board. There is no downside for the retail investor."