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The Intellidex Core ETF Portfolio

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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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Disclaimer

This research report was issued by Intellidex (Pty) Ltd. Intellidex aims to deliver impartial and objective assessments of securities, companies or other subjects. This document is issued for information purposes only and is not an offer to purchase or sell investments or related financial instruments. Individuals should undertake their own analysis and/or seek professional advice based on their specific needs before purchasing or selling investments. The information contained in this report is based on sources that Intellidex believes to be reliable, but Intellidex makes no representations or warranties regarding the completeness, accuracy or reliability of any information, facts, estimates, forecasts or opinions contained in this document. The information, opinions, estimates, assumptions, target prices and forecasts could change at any time without prior notice. Intellidex is under no obligation to inform any recipient of this document of any such changes. Intellidex, its directors, officers, staff, agents or associates shall have no liability for any loss or damage of any nature arising from the use of this document.

Remuneration

The opinions or recommendations contained in this report represent the true views of the analyst(s) responsible for preparing the report. The analyst’s remuneration is not affected by the opinions or recommendations contained in this report, although his/her remuneration may be affected by the overall quality of their research, feedback from clients and the financial performance of Intellidex (Pty) Ltd.

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