This new ETF tracks the proprietary Satrix Momentum Index, developed in-house by Satrix’s quantitative specialists.
On 16 November 2018, the Satrix Momentum Exchange Traded Fund (ETF) listed on the Johannesburg Stock Exchange (JSE) bringing the number of ETFs listed on the exchange in 2018 to twelve.
Donna Nemer, Director: Capital Markets at the JSE, says the exchange is privileged to welcome the Satrix Momentum ETF to the JSE. “We are committed to offering all our investors a variety of choices. This ETF will expand our local smart beta ETF range and provide our investors with an opportunity to invest in a rules-based ETF that offers exposure to stocks that embody positive momentum characteristics.”
ETFs are listed investment products that track the performance of a group or ‘basket’ of shares, bonds or commodities. They allow you to access a wide spectrum of assets and they can be used for hedging, to diversify your portfolio, to lower your risk and to enhance the performance of your portfolio. They are an ideal investment vehicle for those who are new to the world of investing and are suitable for individual as well as institutional investors.
Factor or smart beta ETFs is a growing area internationally and locally. Helena Conradie, CEO of Satrix, says: “I am very excited to announce the latest addition to our ETF range. Satrix is well known for vanilla or market capitalisation ETFs, but our more niche factor ETFs also play a crucial role in portfolio construction for both retail and institutional clients alike. Satrix’s focus is on meeting investor needs and we think the Satrix Momentum ETF is a fine complement to our existing range.”
The Satrix Momentum ETF aims to replicate the performance of the proprietary Satrix Momentum Index by physically holding all the index shares in the underlying portfolio. Shares included in the index are selected because of their superior momentum factor.
Factors are a stock’s measurable characteristics that may in some way explain future performance. A factor (or smart beta) index is a rules-based construction of stocks that all exhibit particular attributes. Momentum is one such factor. In basic terms momentum can be defined as a trend, meaning stocks that are performing well are expected to continue to perform well (ie the share price is going up), while those that are not performing well are expected to show further declines in their share price.
The first ETF in South Africa – known as Satrix40 – was listed on the exchange in November 2000, tracking the performance of the ALSI40 index. The ETF market continues to show steady growth locally and today’s ETF listing brings the total number of ETFs listed on the JSE to 74, with a total market capitalisation of close to R70 billion.