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And two makes nine

10 April 2006 Angelo Coppola

April 10 saw the listing of the Satrix Swix Top 40 and Satrix Resi on the main board of the JSE.

Some R124m was raised in the initial public offering (IPO) with about 1300 new individual retail investors entering the space, and mostly in the Resi exchange traded funds (ETF).

The institutions seem to play a watch and wait position with the retail sector the more excited grouping, due mostly to the nationwide roadshow that was undertaken recently.

The start of the Satrix invasion was in 2000, and now there are nine ETFs available - five Aatrix, two Itrix and two Absa products, with R12bn in market capitalization thus far.

He says that the products are very fluid and active, and there are plans to list more ETFs this year, and appear to entice more retail investors to the market via the monthly investment plan.

According to Russell Loubser, JSE CEO, these products are registered collective investment schemes were listed on the JSE under the ETF sector.

The local ETFs offer cost benefits to investors, while the unit trust sector operates at a disadvantage because a legislated percentage of the unit trust has to be held in cash, while the ETF operates under the auspices of the Stock Exchanges Control Act, where no such rules apply.

The property unit trusts (PUT), for example, are essentially ETFs and yet they operate within the Unit Trust Control Act.

There are some detractors who claim that in essence the JSE Securities Exchange is competing against their own investors. The rules should be the same with EFTs, PUTS, and unit trusts, so that investors can get the full range of options, says one investment insider.

The bottom line however is that ETFs are a cheaper investment option, and they can take lower premiums. They obviously then perform better because they are cheaper, and dont under-perform due to embedded costs.

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