Satrix unveils South African property and inflation-linked ETFs

Feb 24th, 2017 | By | Category: ETF and Index News

Satrix Managers, the company to launch the first ETF in South Africa, has added two new funds to its suite of ETFs – the Satrix Property ETF (JSE: STXPRO) and Satrix Inflation-Linked Bond ETF (JSE: STXILB).

Satrix unveils South African property and government bond ETFs

Members of Satrix Managers celebrated the new ETF launches by blowing the metre long Kudu horn at the Johannesburg Stock Exchange.

The Satrix Property ETF tracks the S&P South Africa Composite Property Capped Index, a value-weighted index of companies within the S&P South Africa Composite which derive more than 60% of total revenue from real estate related activities. The index caps single stock exposure at 10%, helping to promote diversification.

The index comprises 15 companies and is rebalanced quarterly at March, June, September and December.

Exposure to listed property provides investors with an attractive yield common to this asset class. Property has also historically offered investors strong capital appreciation, of which the yield (driven by strong dividend growth) has made up a large component of its total return. According to Satrix, listed property has been the best performing asset class in South Africa over the last ten years.

Listed property tends to have bond-like (with an income stream sensitive to interest rates) and equity-like (with exposure to economic growth) characteristics, which may provide a layer of diversification to an investor’s traditional stock/bond portfolio.

The Satrix Inflation-Linked Bond ETF tracks the performance of the S&P South Africa Sovereign Inflation-linked Bond 1+ year Index, a market-value weighted index of South African Rand-denominated inflation-linked securities where principal and interest to be received is indexed to the local inflation rate.

The ETF may suit investors seeking protection from the negative impact of inflation – which erodes purchasing power. Secondly, holding inflation-linked bonds in a portfolio may provide diversification benefits, which may mitigate against stock market volatility.

The S&P SA Sovereign Inflation-Linked Bond 1+ year Index has delivered approximately 10% annualised return over the last ten years, while maintaining significantly lower volatility compared to traditional asset classes such as property, equities and bonds. While historical returns are not guaranteed to be repeated, the fund will typically continue to produce inflation-beating returns at below-average risk.

Satrix chief investment officer, Helena Conradie, commented: “Satrix will stay relevant and will remain the resonant voice in the South African indexing industry. We will continue to write real stories in the lives of real people.”

The launch event was celebrated with the Johannesburg Stock Exchange’s tradition of blowing the kudu horn, a South African twist on the more mainstream bell ringing ceremony. Blowing a metre-long kudu antelope horn has been a rite of passage for companies listing on the exchange since 2002.

The new listings bring the total Satrix ETF offering to nine funds across equity, inflation-linked bond and real estate offerings. Satrix has announced plans to further expand its suite, specifically in the smart beta and international space.

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