Sygnia Itrix MSCI USA Index ETF
The Sygnia Itrix USA Index ETF provides broad exposure to US equities. The S&P 500 is in a technical bear territory as it is down by more than 20% year to date. Covid-induced supply chain disruptions coupled with the Russia-Ukraine war elevated food, soft commodities and gas supply shortages, necessitating a spike in inflation.
The high inflation caught the Federal Reserve Bank off guard and left the federal open market committee members with no choice but to hike interest rates aggressively, thus spurring uncertainty in the market. High interest rates increase interest payments for companies and debt-burdened consumers. In addition, the valuation metrics such as risk premiums or discount rates for companies increase, leading to a lower equity valuation. The US economy also took a beating at the hands of higher interest rates and inflation. The world’s largest economy experienced two consecutive declines in the first two quarters of 2022.
The ETF has a heavy weighting in the tech, healthcare, consumer discretionary and staples sectors. The tech industry is dominated by FAANG companies: Meta (formerly Facebook), Amazon, Apple, Netflix and Google have deep pockets and are worth more than $1tn individually. The industry helped the world navigate through the pandemic by rapidly accelerating digital transformation. However, the tech sector has had its fair share of challenges. Some of the challenges, which range from supply shortages to regulatory tightening in China, were prevalent during the pandemic and were magnified post major lockdowns.
The Sygnia Itrix MSCI USA ETF aims to replicate the price and yield performance of the MSCI USA Index. The fund is costly though as it has a total expense ratio of 0.64% but it has a very low tracking error of 0.06%, suggesting that it is rebalanced frequently.
Fund suitability
Fees
Top holdings
Sygnia Itrix MSCI USA Index ETF (JSE:SYGUS)
New to investing and want to learn more about other ETFs?
Read: Top Fund Picks for December
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
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.