Welcome to the first ETF Monthly Review, a neat monthly update of market news affecting ETFs, as well as a set of favourite funds chosen by the Intellidex team. We’re collaborating with Intellidex to bring you the latest insights on ETFs, probably the niftiest way to invest out there!
What’s happened in the markets?
The Ramaphosa effect and Donald Trump’s tax cuts triggered a welcome rally in global stock markets. The JSE Top 40 index climbed 23% in 2017 with most of the growth coming in the last quarter of the year. Naspers and metals gave impetus to the rally.
The JSE Top 40 index climbed 23% in 2017 with most of the growth coming in the last quarter of the year. Naspers and metals gave impetus to the rally. Read more...
Our favourite ETFs
Domestic equity:
Satrix SA Quality ETF
The fund avoids the concentration risk that has come to dominate the top 40 index as it caps the weight of each counter and sector. We also like its selection criteria and it offers investors potentially more diversified exposure to the entire market. Read more...
Foreign equities, developed markets:
Ashburton Global 1200 ETF
We’ve changed this one this month from our previous favourite, the Satrix S&P 500. We’ve done that to slightly de-emphasise US equities which are currently expensive, in favour of a bigger weighting for Europe and Japan where prospects are improving. But US equities remain the biggest contributor to the fund’s returns. We want to maintain US exposure to capitalise on the new tax changes that are likely to benefit companies. Read more...
Foreign equities, developing markets:
Satrix MSCI Emerging Markets ETF
This fund provides exposure to high-growth economies such as China and India, which are not included in any of the developed market funds, thus offering further diversification. The Satrix MSCI Emerging Markets ETF tracks the MSCI Emerging Markets Investable Markets index, which captures companies across 23 countries. Read more...
Bond and cash funds, short term:
NewFunds TRACI 3 Month
If you are investing for a very short period, usually less than a year, then the NewFunds TRACI 3 Month ETF (NFTRCI) is a natural choice because it is least sensitive to sudden adverse interest rate movements. It is similar to earning interest on your cash at the bank with a minimal possibility of capital loss. Read more...
Bond and cash funds, long term:
Satrix ILBI ETF
For a longer investment horizon, the motivation is to protect your investment against inflation. Because the Satrix ILBI ETF promises to have the lowest expense ratio of 0.22%, it is our choice here.
ETF Investment Thought
Core-satellite strategies: A good strategy is to rely on ETFs for the “core” of an overall portfolio, but complement it with certain strategic investments that may be short term to take advantage of current conditions.
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.
Intellidex staff may hold positions in financial instruments or derivatives thereof which are discussed in this document. Trades by staff are subject to Intellidex’s code of conduct which can be obtained by emailing mail@intellidex.coza.
Intellidex may also have, or be seeking to have, a consulting or other professional relationship with the companies mentioned in this report.