Each month, the investment gurus at Intellidex scan the market to come up with a list of their favorite ETFs. Learn more about their top picks this month here.

Domestic equity

  • CoreShares Sci-Beta Multi-Factor ETF
  • FNB MidCap ETF 

Foreign equity

  • CoreShares Total World Stock Feeder
  • Sygnia Emerging Markets  50 ETF

Bonds and cash

  • Satrix ILBI ETF


  • Satrix SA Divi Plus ETF 

How did Intellidex come up with these picks? 

South African equity and bond prices came under pressure in May – the top 40 index reversed its April gains, posting a 3.6% loss while the all bond index dropped 5.8%. This as SA’s chronic power outages and its diplomatic fallout involving the US and Russia shocked financial markets, including the rand.

The diplomatic situation resulted from SA being accused by the US that it supplied weapons to Russia, which continues its war against Ukraine. While a detailed analysis of this diplomatic situation is beyond the scope of this research note, it comes as no surprise that SA asset prices reacted sharply to the events.

The rand lost 7.8% of its value in May, depreciating to almost R20/dollar (high of R19.92/dollar during the month) as the diplomatic situation ebbed and flowed, adding to the woes that the local economy already faces. Overall, the FTSE/JSE All Share index was down 4% during May, with the mid-cap index (which contains shares of companies mostly exposed to SA) dropping 8%.

Developed market equities had a mixed month – the US-based S&P500 was flat (+0.2%) while the tech-heavy Nasdaq composite gained 5.8%. In the UK, the FTSE100 lost 5.4% while the German Dax declined 1.6%. In Hong Kong and Paris, the Hang Seng and Cac 40 were down 8.3% and 5.2% respectively.

Domestic equity: CoreShares Sci-Beta Multi-Factor (SMART) and FNB MidCap (FNBMID) ETFs 

This month’s core pick reflects our view that any allocation to SA equities must be diversified, given the local economy’s deteriorating condition. Accordingly, the  CoreShares Sci-Beta Multi-Factor ETF (-5.5% in May) exposes investors to six investment styles (also known as factors).  This enables investors to generate smoother, rather than volatile returns that often result from exposure to one single factor (especially prominent styles such as value or  growth).

One of the companies included in the ETF is international food services giant Bidcorp, which was spun out of diversified services, trading and distribution company Bidvest Group in 2016. Bidcorp has operations in SA, the UK, Europe, Australasia and emerging markets. 

It sells food and renders food-related services and generated over half of its FY22 revenue from sales to hotels and quick-service restaurants across its geographical segments. In its latest set of results (1H23), Bidcorp’s SA-based businesses performed well, with revenue and profitability exceeding pre-Covid levels due to pent-up demand for dining and a recovery in hotel occupancy levels. However, these businesses remain exposed to load-shedding which it expects to persist for the rest of FY23. However, we believe Bidcorp remains well positioned to perform as the services sectors in the global economy continue to drive activity. We also expect any long-term economic recovery from peaking (and then declining) interest rates globally to support consumer demand, boosting Bidcorp’s performance as well as the ETF. However, drawbacks of the ETF include its high total investment cost (0.7%) and dividend yield (4.4%), which is below SA’s 6.8% inflation rate.

Our satellite pick is the FNB MidCap ETF  (-7.7%), which exposes investors to the mid-cap section of SA’s equities market. This section of the market consists of “SA Inc” firms, some of which are being battered by load-shedding and SA’s often self-imposed economic and political own goals. However, the de-rating of SA equities in recent times means that shares have become cheaper (and present attractive entry points to some equities which still offer value despite the challenging macro-environment), which is always a good time to build portfolio positions, especially for risk-seeking investors. The ETF is, however, expensive with a TIC of 0.72%.

CoreShares Sci-Beta Multi-Factor (SMART) and FNB MidCap (FNBMID) ETFs 

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Foreign equity: CoreShares Total World Stock Feeder (GLOBAL) & Sygnia Emerging Markets  50 (SYGEMF) ETFs

Our core global equities pick is the CoreShares Total World Stock Feeder ETF (+6.4%). It tracks the performance of the FTSE Global All Cap Index by investing in the Vanguard Total World Stock ETF. The fund has a relatively low total expense ratio of 0.29%. Data from the Vanguard Total World Stock ETF indicate that the index was trading at a reasonable price:earnings (PE) ratio of 16.2x and that 59% of assets were invested in the US at the end of May.   

What we also like is that the index/ETF has 7,122 constituents, which enables returns to come from multiple shares or sectors. This differs from the current trend driving key US indices – in recent months, artificial intelligence (AI) has become a buzzword in the developed business world, enabling growth shares to outperform value shares. 

This is due to market participants’ expectations of innovation and productivity gains from AI-driven applications. The trend’s prominence drove the performance of the tech-driven Nasdaq 100 and Russell 1000 indices during May. However, in its recent financial markets update, Nasdaq (US-based-investment analytics firm) cautioned about market breadth as only a few tech-driven stocks have contributed to index returns, which we believe is a risk from a portfolio perspective. 

As such, we think that the CoreShares Total World Stock Feeder ETF’s broad exposure to the US and the rest of the world enables investors to bulk up on global equities while participating in any sustainable AI-driven theme over the medium to long term.

Our satellite (or higher-risk pick) is a typical value play. The Sygnia Emerging Markets 50 ETF (+6.2%) provides exposure to emerging market economies (EMs). Emerging market economies face lower economic growth rates from persistent inflation and high interest rates, according to global fund manager Lazard Asset Management. 

However, Lazard also believes that EMs have already borne the brunt of tightening monetary conditions and their effects on growth and that despite some volatility from global banking shocks, EMs may be first to recover globally as monetary conditions peak and gradually subside. Accordingly, data from global index provider MSCI show that the MSCI EM 50 Index traded at a relatively attractive forward PE ratio of 12.8x and a dividend yield of 2.9%. As such, we think an allocation to EM equities would be useful for ETF portfolio purposes.

CoreShares Total World Stock Feeder (GLOBAL) & Sygnia Emerging Markets  50 (SYGEMF) ETFs 

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Bonds and cash: Satrix ILBI ETF (STXILB)

Investors are rightly concerned about the potential damage of load-shedding to SA’s economic growth. Our internal estimates show that load-shedding could lead to an output loss of R37.5bn this year. This equates to 0.8% of SA’s real GDP growth rate which came in at 2% in 2022.   

However, while growth implications are worth considering, we also think that load-shedding will lead to even more persistent inflation given the increased costs associated with blackouts.

As such, we favour an inflation-linked bond ETF in which the principal price of the bonds (as well as the interest payments) rise and fall with the rate of inflation, thus protecting the purchasing power of investors. 

In addition, bonds may improve the diversification of portfolios given their low correlation with equities. In SA’s case, the All Bond and All Share indices have a correlation coefficient of just 0.55.  Accordingly, the Satrix ILBI ETF (-2.5%) is our pick for this month.


Satrix Inflation-Linked Bond (STXILB)

Dividends: Satrix SA Divi Plus ETF (STXDIV)

The Satrix SA Divi Plus ETF (-10.3%) is our dividend pick for this month. The fund tracks the performance of the FTSE/JSE Dividend+ Index, which selects the top 30 stocks by a one-year forecasted dividend yield. The constituents’ weightings within the index are determined by their dividend yield as opposed to market capitalisation. 

This provides a forward-looking estimate of expected dividends, which is advantageous relative to peer indices that may use trailing dividend yield measures. However, the risk of forecasting error may be a disadvantage to investors when investing in the ETF. In addition, it is also relatively expensive with a total investment cost of 0.61%. Coal miner Exxaro, which is employing a coal-export strategy to fund its diversification from fossil fuels, is one of the leading companies in the ETF. It has a healthy dividend yield of 6.8% based on its FY22 payout of R11.36/share.

Satrix SA Divi Plus ETF (STXDIV)

 Satrix Inflation-Linked Bond (STXILB)

New to investing and want to learn more about other ETFs?

Satrix Rafi 40 ETF (JSE:STXRAF) suits investors who want passive exposure to fundamental weighted equities over a long-term investment horizon.
Satrix FINI ETF (JSE:STXFIN) is suitable for risk-tolerant investors seeking exposure to emerging market equities.
Global REIT Index Feeder ETF (JSE:ETFGRE) suits investors who want passive exposure to global listed property over a long-term investment horizon.

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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


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.


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.

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