Satrix to launch ETF that tracks quality listed companies

SATRIX, which pioneered exchange traded funds (ETFs) in South Africa, is listing a sixth ETF this year to complement its range: the Satrix Quality South Africa ETF.

The initial public offering to buy the new ETF opened a week ago, and it is expected to be listed on the JSE on September 26.

The Satrix Quality South Africa ETF tracks the S&P Quality South Africa Index, which consists of high-quality stocks in the South African market, ranked by a quality score. The score is based on a company’s return on equity, accruals ratio and financial leverage ratio.

The index is rebalanced semiannually, and the weight of each constituent is capped at 10%.

Jason Swartz, the head of portfolio solutions at Satrix, says: “Some indicators of strong quality characteristics of companies are good management, strong balance sheets, high and sustainable levels of profitability, and a high level of earnings quality.”

The current top 10 shares on the Quality Index are Tiger Brands, Mr Price, Bidvest, Capitec, Standard Bank, Sanlam, Clicks, AVI, RMB Holdings and Exxaro.

Meanwhile, Satrix announced this week it will lower the annual management fees on its flagship Satrix 40 ETF from October 1.

“Allowing all South Africans access to the markets has always been at the core of what Satrix stands for, and to the extent that costs can be lowered responsibly, we will endeavour to do so,” says Satrix chief executive Helena Conradie.

The current total expense ratio (TER) of 0.38% will be lowered to a capped TER of 0.1%. Satrix says this will be achieved through lowering the management fee. – Staff Reporter