Category Investments

Satrix to list two new funds

07 March 2006 Tonny Mafu, Business Report

Johannesburg - Satrix, which manages three exchange-traded funds (ETF), would list two new funds on the JSE on April 10 on the back of rising investor interest in the securities, it said yesterday.

Satrix, which is owned by the JSE, Deutsche Securities and Sanlam, will raise money in an initial public offering from March 15 till April 3.

ETFs are baskets of shares that are listed on a stock exchange and reflect the performance of the underlying shares.

Satrix said it had received approval from the Financial Services Board on Monday night.

The new ETFs are the Satrix Resi and Satrix Swix 40. The Satrix Resi will be made up of the major mining holdings listed on the JSE, including Sasol.

The JSE's shareholder weighted Top40 index, which is the less volatile benchmark index used by institutional fund managers for long-term retirement funds, will underlie the Satrix Swix 40.

The Satrix Resi will allow investors to benefit from the commodities boom and allow them to adjust the impact of resources in their portfolio quicker and cheaply.

The Satrix Swix 40, on the other hand, has a reweighting on the Top40 index to reduce the effect of resources shares. Satrix said this would reduce the volatility and smooth performance over time.

Mike Brown, Satrix's general manager, said the new funds had been developed to meet the growing demand for additional index funds that would track performance of the leading benchmark indices.

Brown said the Satrix Swix was developed to attract the pension fund industry as it would offer low costs and high liquidity. No management fees are payable if Satrix securities are bought directly on the JSE.

Satrix already has three exchange traded funds, the Satrix 40, Satrix Fini and Satrix Indi, which track the Top 40, financial and industrial indices, respectively. The funds have returned 47.9 percent, 31.4 percent and 35.2 percent in the past year, respectively.

A total of R8.4 billion is invested in these funds, of which R5.6 billion is in the Satrix 40.

Turnover in the Satrix 40 rose 268 percent in 2005 to R4.2 billion - 80 percent of the fund's market capitalisation.

The fund outperformed 95.6 percent of the comparable unit trusts in the past year, according to a unit trust survey.

The Satrix 40 has already turned over R1.1 billion worth of securities in the first two months of 2006.

Roger Koep of Deutsche Securities said Satrix offered international investors exposure to the local economy.

He said the Satrix Resi was justifiable on the grounds of the strong presence of resources on the JSE and the expectation that commodity prices would remain firm.

Brown said the turnover at Satrix was growing faster than that at the JSE. Trading liquidity at the Satrix Swix would be boosted by an active futures index at the South African Futures Exchange.

Pieter Davies, a fund manager at Coronation Fund Managers, said the advent of ETFs was welcome in the light of investors looking to access the market cheaply.

He, however, said that the listing of the new Satrix funds came at a time when the market had already run hard.

With thanks to: Business Report

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