Investors score in ‘war’

COMPETITION HEATS UP IN THE ETF SPACE

Sygnia’s acquisition of the db X-trackers business, and its five popular funds which reference major foreign indices, has sparked a product and price war among two of the larger issuers in the country.

Absa Capital leads the way. And while its 16 ETFs and five ETNs have a market value in excess of R31 billion, this is mostly comprised of the NewGold and NewPlat ETFs. Coreshares has a wide variety of funds available, but remains tiny when measured by market cap (R2.1 billion).

Increasingly, Satrix and the soon-to-be-rebranded Sygnia Itrix will be competing in the same space, targeting the same types of investors, especially in the retail segment. These two issuers are neck-andneck. The market cap of Satrix’s nine ETFs (as at 30 June) was R12.4 billion, while the five db X-trackers funds (then still held by Deutsche Bank) totaled R11.99 billion.

According to etfSA data, the db X-trackers attracted R157.8 million in new capital in the first six months of the year. Satrix, on the other hand, saw redemptions of R154.4 million in the same period.

Sygnia telegraphed its plan for db X-trackers and, given that the acquisition only closed on July 1, this allowed Satrix to move first. The Sanlam-owned business has launched three new global ETFs, which will start trading on July 25. Two of the three take direct aim at products already offered by db X-trackers (world index and exposure to the US market). And while Satrix has rushed international ETFs to the market, Sygnia has made some immediate changes to fees. It has cut the management fees of the five db X-trackers ETFs, but only on its Alchemy Platform. The management fee for the MSCI World ETF drops by 10 basis points from 0.6% per annum to 0.5% (excluding VAT, for investments of under R100 million).

For the region-specific ETFs, management fees are cut by 20 basis points for average retail investors (under R2 million, previously under R10 million). These drop from 0.75% per annum to 0.55%. There are cuts of 10 basis points at the higher thresholds.

The new owner of the db X-tracker funds says it will expand its ETF range “in the next three months”. It will launch another five international ETFs.

It’s not stopping there. Three domestic ETFs will also be launched, all with management fees of 0.10% per annum and targeted TERs of 0.15%.

This is taking aim squarely at Satrix’s core business and will no doubt put further downward pressure on fees. Investors will benefit, and this is only a good thing.

Investors will benefit which is a good thing