It’s hard to believe, but today marks the 24th anniversary of the day the first Exchange Traded Fund (ETF) hit the Johannesburg Stock Exchange. When the Satrix 40 (with the JSE code: STX40) was launched, it was priced at a modest 774 cents. Reflecting on the initial public offering, it was quite the event—demand soared with billions of Rands applied for and nearly 4 million shares traded that first day. I’ll admit, ETFs were new to me back then, but a persuasive friend convinced me of their potential. So, I jumped in during the IPO and have kept my hold on those Satrix 40 ETFs ever since, never selling a single one.
Fast forward to today, and the price has escalated to around 7700 cents, making that initial investment nearly 10 times more valuable. But here’s an intriguing twist: investors have also accumulated dividends totaling over 2450 cents, meaning the total value for those who bought on day one has skyrocketed to an impressive R101.50 from that initial 774 cents.
This equates to an annualized return of 11.3%. When you put that into perspective, it’s even more impressive considering the S&P 500 has offered just shy of an 8% annualized return over the same time span. And let’s not forget, if you’d reinvested those dividends, your returns would be even more robust.
What’s particularly noteworthy about the Satrix 40’s debut is how it introduced passive investing to South African investors—a strategy that’s offered not just substantial returns, but at a low cost. These low fees have undoubtedly nudged the broader financial services market to adjust, leading to lower fees in Collective Investment Schemes (CIS) like unit trusts, which has resulted in considerable savings for investors.
Turning our attention to the top holdings as of September 30, 2024, you’ll find some of the heavyweights that make up the Satrix 40. It’s a snapshot into the fund’s strategy and focus, giving investors insight into what drives these returns.
Here at Just One Lap, we champion the concept of passive investing through ETFs. In our weekly blog, we delve into the various ETFs available on the local market, examining what sets each one apart. Whether you’re curious about the indices they track or which portfolio might benefit most from a particular ETF, we’ve got you covered. Our goal is to enlighten you on how costs can play a role in your investment performance and help you make informed choices.
For those interested in the cold hard numbers, here’s a brief rundown: The Satrix 40 ETF launched on November 27, 2000, has a total investment cost of just 0.1%, a market cap of R14.7 billion, and offers a dividend yield of 3.37%. Just in the past year, its performance has been up 10.1%, with even more significant gains over three, five, and ten years—22.7%, 53.7%, and 71.3%, respectively. And the best part? It’s eligible for a tax-free savings account.
So if you’re looking to dive into ETFs or simply broaden your understanding, this blog is your go-to resource for everything from differences between ETFs to the intricacies of tracking various indices. As always, happy investing!
