While investing can be thrilling, there is a learning curve. Where do you begin with so many options? Enter exchange-traded funds or ETFs. They are a well-liked financial instrument that is sweeping the globe. There is a compelling reason investors are flocking to ETF, from the United States to South Africa.
Why are ETFs such a hit? They combine the most significant aspects of mutual funds and equities. You receive the trading flexibility of stocks and the diversification of mutual funds. They are available for purchase and sale at market rates all day long. They provide you with regular updates on their net asset value. ETF adoption is on the rise in South Africa. But which is the best when there are so many options? The answer depends on various factors, including past performance, fees, and your investment goals.
Are you looking for capital gains? Some ETFs concentrate on growth stocks with the potential for significant profits. Or maybe you just like things to be stable? Some ETFs offer consistent, long-term growth by following well-known indices. The choice is yours.
Letโs explore it. We will examine the best-performing ETFs in South Africa, break down their features, and compare their past performance. We will go into the significance of net asset value and expense ratios. By the end of this guide, you will know which ETF would be the best choice for your portfolio. Letโs search for the ideal ETF for you!
Best-performing ETFs Last 10 years South Africa
The ETF market in South Africa is thriving and diverse, providing investors with various options. Let’s examine a few of the best-performing ETFs you should consider.
1. Strix 40 ETF
In the South African ETF market, the flagship Satrix 40 ETF seeks to mimic the performance of the FTSE/JSE Top 40 Index. This index comprises the top 40 market capitalization companies listed on the Johannesburg Stock Exchange (JSE). Satrix won 9 awards at the 6th annual South African Tracker Funds Awards (SALTA) held at the JSE on Thursday, March 30, 2023, including the People’s Choice award for the best South African ETF.
Features
- You may get exposure to a wide range of economic sectors and industries in South Africa by investing in the Satrix 40 ETF. In addition to reducing risk, diversity can produce more consistent profits.
- With significant liquidity, the Satrix 40 ETF is one of the most traded ETFs in South Africa. This implies there will not be any considerable price fluctuations when you acquire and sell shares.
- With a competitive expense ratio, the Satrix 40 ETF is an affordable choice for investors. Over time, lower costs can significantly increase your net returns.
Who Should Consider the Satrix 40 ETF?
The following investors can benefit from the Satrix 40 ETF:
- Long term investors
- Diversification seekers
- Cost-conscious investors
2. Sygnia Itrix MSCI World ETF
The Sygnia Itrix MSCI World ETF is an excellent option for investors looking for worldwide diversity. It has been among the top five performing ETFs in the nation for the last five years and has also topped the list for the previous 10 years. With companies from 23 developed markets, the MSCI World Index is the standard against which this ETF seeks to replicate.ย
Features
- The ETF invests in businesses in developed markets such as Europe, Asia, and North America. Due to the wide distribution of assets across different economies and sectors, this broad exposure helps reduce risk.
- Another level of diversity can be added by investing in the Sygnia Itrix MSCI World ETF, which exposes investors to various currencies. It may be advantageous in situations where local currency depreciates.
- This ETF consists of shares in some of the worldโs most renowned and prosperous businesses, like Apple, Microsoft, and Amazon. It provides development possibilities via international stocks of superior quality.
Who Should Consider Sygnia Itrix MSCI ETF
This ETF is a versatile investment option for:
- Portfolio diversifiers
- Tech-savvy investors
- Investors seeking global diversification
3. Ashburton Global 1200 ETF
Ashburton Global 1200 ETF tracks the S&P Global 1200 Index, which monitors the seven worldwide indices based on their free-float market capitalization. The Ashburton Global 1200 Equity ETF, which holds about 30% of the world market capitalization, invests in developed and emerging economies across the US, Europe, Japan, Canada, Australia, Asia, and Latin America.ย
Features
- Its coverage is extensive. It invests in firms across Europe, Asia, North America, and other continents.
- Exposure to other currencies can offer additional diversification and possible benefits.
- This ETF combines established marketsโ stability with high-performing international businessesโ growth potential.
Who Should Consider Ashburton Global 1200 ETF
- Income-oriented investors
- Equity investors
- Currency diversified
4. CoreShares Top 50 ETF
The CoreShares Top 50 ETF aims to mimic the S&P South Africa Top 50 Indexโs performance. The top 50 market capitalization businesses listed on the Johannesburg Stock Exchange are included in this index.
Features
- Because stocks are weighted according to their market size, the performance of the ETF is more heavily influenced by larger companies.
- The ETF typically maintains strong liquidity because of its composition of large-cap stocks, which facilitates the buying and selling shares on the JSE.
- It consists of reputable businesses with a solid track record.
Who Should Consider CoreShares Top 50 ETF
- Medium- to long-term investors
- Portfolio builders
- Passive investors
5. Gold ETF South Africa
Gold ETF South Africa is handy for protecting investment portfolios from market volatility. With the ability to offer investors exposure to the gold market without the hassles of physical gold ownership, South African Gold ETFs are a unique financial product. Typically valued in South African rands, these EFTs are designed to replicate changes in the price of gold.
Features
- It provides a cost-effective choice for investing in gold without requiring physical storage.
- It offers customers a simple, affordable option to invest in gold without purchasing, storing, or insuring the precious metal.
- Investors have easy access to track the holdings and performance of the fund.
Who Should Consider Gold ETFs in South Africa
- Inflation hedgers
- Long term investors
- Diversification seekers
6. NewFunds Equity Momentum ETF
Before switching to the Risk-Controlled WITS SA-Momentum Index, the NewFunds Equity Momentum ETF followed the performance of the Barclays/Absa South Africa Equity Momentum Index. The fund aims to profit from short-term momentum in the biggest JSE firms. This index is perfect for investors seeking capital gains from high-performing equities because it chooses stocks based on their recent price movements.
Features
- It keeps costs in line with competition, increasing investorsโ net returns.
- It reduces the risk associated with owning a single stock by providing diversified exposure across several South African equity market sectors.
- The ETF seeks to profit from rising trends by concentrating on equities with excellent recent price performance.
Who Should Consider NewFunds Equity Momentum ETF
- Tactical asset allocators
- Long term investors
- Active traders
What is iShares ETF?
The leading ETF provider in the world, iShares, has over $2 trillion invested in over 800 distinct products spanning numerous asset classes and investing techniques. The largest asset management company in the world, BlackRock, is the parent company of iShares. BlackRock issues and markets the iShares product line.
Benefits of iShare EFTs
- iSharesETFs provide immediate diversification over various assets, industries, or geographical areas. This diversity lessens the impact of a possible loss in any single asset.
- Investors can view the precise assets that iShares ETFs own thanks to their daily disclosure of holdings. Investors are better able to make smart investment selections because of this transparency.
- ETFs provide the same trading flexibility as stocks, allowing for implementing a range of trading methods, including options trading, stop-loss orders, and limit orders. Mutual funds usually do not offer this kind of flexibility.
- Because they are traded on large stock exchanges, iShares ETFs have a high level of liquidity. Investors can easily access their money as they can purchase or sell shares at market prices throughout the trading day.
How to Choose the Best ETF for You
Selecting the finest ETF requires taking into account a number of important variables that are in line with your financial condition, risk tolerance, and investing goals. Here is a guide to assist you in making a wise choice:
Define Your Investment Goals
Make sure you understand your investing goals before choosing an ETF. Are you seeking income, growth, or a combination of the two? Decide if your goal is to build wealth over a long time or to make gains in the short term.ย
Assess Your Risk Tolerance
The risk of ETFs varies based on several criteria, including investment strategy, asset class, and geographic focus. By evaluating your risk tolerance, you can be sure that the ETF you select will keep you comfortable when markets fluctuate.
Consider Time Horizonย
Select a timeframe for your investments (short-, medium-, or long-term) and match it to the volatility of the ETF.
Understand the Strategy
Examine the strategy and objective of each ETF to make sure it aligns with your goals and risk tolerance.
Assess Performance
To estimate possible outcomes, compare past returns to peers and standards.
Mind Expenses
To save costs and increase profits, consider fees and expense ratios.
Examine Your Diversification
As the ETF is diversified across industries and geographical areas, make sure it enhances your portfolio.
Assess Liquidity
To make buying and selling easier, confirm trade volume and liquidity.
Ask for Guidance
Speak with a financial advisor for individualized advice based on your financial circumstances and objectives.
Conclusion
Top ETFs expose investors to a wide range of sectors and geographical areas. These EFTs offer prospects for capital gains together with broad market exposure that aids in risk management. ETFs provide an economical and effective means of investing in the African stock market and other markets. Remember your particular financial situation and speak with a financial advisor to customize your investing plan.
