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Exchange Traded Funds (ETF's)

Exchange Traded Funds…

(or ETFs) are open ended mutual funds that can be traded at any time throughout the course of the day. Typically, ETFs try to replicate a stock market index such as the JSE (Johannesburg Securities Exchange), a market sector such as energy or technology, or a commodity such as gold or petroleum; However, as ETFs proliferated in 2006 from under one hundred in number to almost four hundred by the end of the year, the trend has been away from these simpler index-tracking funds to indexes and other proprietary groupings of stocks.

The legal structure and makeup varies around the world, however the major common features include:

  • An exchange listing and ability to trade continually;
  • They are index-linked rather than actively managed;
  • Through dynamic and quantitative strategies, these can be dynamic rather than static indexing strategies
  • The ability to handle contributions and redemptions on an in-kind basis (typically in large blocks of shares only); and
  • Their ‘value’ (but not necessarily the price at which they trade-they can trade at a ‘premium’ or ‘discount’ to the ‘underlying’ assets’ value) derives from the value of the ‘underlying’ assets comprising the fund.

These qualities provide ETFs with some significant advantages compared with traditional open-ended collective investments. The ETF structure allows for a diversified, low cost, low turnover index investment. This appeals to both institutional and retail investors both for long term holding and for selling short and hedging strategies.

Popular ETFs

  • Satrix Funds
    • Satrix Top40
    • Satrix Fini15
    • Satrix Swix Top40
    • Satrix Indi25
    • Satrix Resi
    • Satrix Divi
    • Satrix Rafi
  • db x-trackers
    • DJ EURO STOXX 50 Index ETF
    • FTSE®100 Index ETF
    • MSCI USA Index ETF
    • MSCI Japan Index ETF
    • MSCI World Index ETF
  • Absa Funds
    • Absa NewGold
    • Absa NewSA
    • Absa Shari'ah
    • eRAFI™ Overall SA
    • eRAFI™ SA Financial 15
    • eRAFI™ SA Industrial 25
    • eRAFI™ SA Resource 20
  • RMB (BIPS)
    • Bips FTSE/JSE Top 40
    • Bips Government Inflation Linked Bond
  • NEDBANK (BettaBeta)
    • BettaBeta Equally Weighted Top 40
  • PROPTRAX
    • Property Index Tracker SAPY