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The Intellidex Core ETF Portfolio


The Intellidex Core ETF Portfolio

The time ahead remains tough and volatility in the markets should continue, especially in SA where the economy was already in recession prior to the pandemic. In such times, offshore diversification is an investor’s best bet.

Locally, we prefer defensive strategies: NewFunds Volatility Managed Defensive/Moderate/High Growth Equity ETFs; CoreShares South Africa Dividend Aristocrats ETF and NewFunds TRACI 3 Month ETF.

Internationally, we have a few favored core holdings: Satrix MSCI World ETF; Satrix MSCI Emerging ETF; FirstRand US Dollar Custodian Certificate; and CoreShares S&P Global Dividend Aristocrats.

Core-satellite strategy

The technology rally seems to be enduring, driven by the increased number of people working from home. Many should continue working from home as the number of infections continues to rise, which will drive value in technology assets. Investors can look to gain exposure to technology shares through the 1nvest S&P 500 Info Tech Index Feeder.

Portfolio completion

Riding on the sentiment that China’s economic growth is expected to outperform most other markets, an investor can gain exposure into the market through a recent JSE listing, the Satrix China ETF.

While global equities have come under pressure recently, positive developments on a vaccine, provision of further stimulus packages as well as improved trade relations would boost valuations. Locally, the market has been under pressure even before Covid-19 and the prospects have not improved. Therefore, it makes sense to still be overweight in international assets.

Intellidex Reviews September 2020: ETF Picks 

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Background: Exchange-traded funds (ETFs)

Exchange-traded funds (ETFs) are passively managed investment funds that track the performance of a basket of pre-determined assets. They are traded the same way as shares and the main difference is that whereas one share gives exposure to one company, an ETF gives exposure to numerous companies in a single transaction. ETFs can be traded through your broker in the same way as shares, say, on the EasyEquities platform. In addition, they qualify for the tax-free savings account, where both capital and income gains accumulate tax free.

Benefits of ETFs

  • Gain instant exposure to various underlying shares or bonds in one transaction
  • They diversify risk because a single ETF holds various shares
  • They are cost-effective
  • They are liquid – it is usually easy to find a buyer or seller and they trade just like shares
  • High transparency through daily published index constituents

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