South Africa’s top-performing ETF

Siyabulela Nomoyi

The Sygnia Itrix MSCI USA Index ETF has delivered both stellar performance and longevity. Over the past five years it has been one of the top five performing ETFs in the country, and over the past 10 years it tops the list, having delivered a total return of 20.01% per annum*.

This has been over a period that has not been easy for South African investors. For the five years to the end of April 2019 the JSE grew at only a little above inflation.

In the US, however, the stock market has been far stronger. The MSCI USA Index, which is made up of the 624 largest companies listed on the New York Stock Exchange, has grown at around 17.5% per year in rand terms since 2014. Investors in the Sygnia Itrix MSCI Index ETF, which tracks this Index, have benefited from this performance.

“It has been the top-performing index tracker fund in South Africa over the past 10 years, and the top-performing fund in the regional general equity category, which includes actively-managed funds.” says Siyabulela Nomoyi, Head of Index Management at Sygnia. Sygnia Itrix is the second largest provider of ETFs in the country.

A large part of this growth has been driven by technology companies in the Index like Apple, Amazon, Facebook and Netflix. Investors have also benefited from the presence of major global brands in the Index, such as Avis, Johnson & Johnson and Coca-Cola.

“As a passive fund, the performance comes from the index that it is tracking,” says Nomoyi “We know that past performance is no guarantee of future returns, but over the past 10 years this would have been a great part of a diversified portfolio.”

The performance of this ETF highlights the value of passive, low-cost investments. This fund gives broad exposure to over 600 of some of the world’s top companies at a total fee of 0.86%.

“Investing in shares does come with some risks, but by investing in an index that is spread across so many different companies operating in a range of sectors, that risk is managed,” says Nomoyi. “This makes a low-cost ETF like this suitable for young investors looking for offshore exposure. It’s also useful for more sophisticated investors who want to invest specifically in the US market. Because the index it is tracking is measured in US dollars, it also provides protection against the depreciation of the rand.”

As it is a specialist fund the Sygnia Itrix MSCI USA Index ETF can form part of a diversified portfolio for investors wanting international exposure. This would ensure that investors are not over-exposed to a single market.

Investors can easily access this fund and other Sygnia Itrix ETFs through the Sygnia Alchemy platform, which charges an annual administration fee of only 0.2% for investments below R2 million. At over R2 million, the platform charge is just 0.1%. By investing through the Sygnia Alchemy platform, investors will also have some of the ETF management fee reimbursed to them.

Source: etfSA.co.za / Profile Media Funds Data (30/04/2019)
*Annualised over a 10-year period to 30/04/2019. Dividends reinvested.



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