The South African Listed Tracker Funds (SALTA) Awards took place on 13 June 2018.
The South African Listed Tracker Funds (SALTA) Awards took place on 13 June 2018. This was the inaugural event hosted by independent service providers to the South African Exchange Traded Funds (ETF) industry - Thompson-Reuters, Profile Data and ETFsa, for tracker funds in South Africa.
The awards recognised leaders in the growing South African ETF industry for:
Best total investment returns for 1 and 3 years in various categories
The efficiency in tracking the indices which an ETF benchmarks
Annual Tradability
The raising of new and additional capital to the JSE
An award for the “favourite ETF” chosen by popular poll
Only five Sygnia Itrix ETFs were eligible for the awards as the qualifying criterion was a track record of at least one year to 31 March 2018. Sygnia Itrix ETFs competed in the “Foreign and Commodities section” of the awards, with the other sections being “SA Equities” and “SA Non-Equities”.
The Sygnia Itrix MSCI US Index ETF won the award for best total return over three years in its category, with an annual return of 7.2% over the three year period.
The Sygnia Itrix MSCI World Index ETF won the award for the best capital raising for any fund over the period of one year, and Sygnia Itrix won for overall best capital raising issue house. Sygnia raised over R4.5 billion in capital from new and existing ETFs over the period March 2017 to March 2018.
The Sygnia Itrix MSCI World Index ETF won the award for the best capital raising for any fund over the period of one year, and Sygnia Itrix won for overall best capital raising issue house. Sygnia raised over R4.5 billion in capital from new and existing ETFs over the period March 2017 to March 2018.
Although the funds that were part of the awards have significant track records with some going back to 2005, Sygnia is relatively new in the ETF space. Sygnia acquired db X-trackers on 1 July 2017. This acquisition meant Sygnia started its entry into the ETF space with five listed ETFs referencing the MSCI World index, the MSCI USA index, the MSCI Japan Index, the FTSE 100 index and the Eurostoxx 50 index. These five ETFs had a combined total of R12 billion in assets under management when they were taken over by Sygnia.
The business was then rebranded to Sygnia Itrix. The name Itrix was the original name of the db X-trackers business when the first international ETFs were launched on the JSE in 2005; so it was fitting that Sygnia reclaimed this name for the funds. As ETFs were a new offering, the team had to upskill very quickly on ETFs and how they worked. Although the basic underlying structure of an ETF is the same as a unit trust where both are Collective Investments Schemes, the mechanics around how these funds are run, are different. ETFs trade mainly in the secondary market (in this case on the Johannesburg Stock Exchange (JSE)) where they are bought and sold between investors without the assistance of the management company. Unit Trusts, on the other hand, are bought and sold directly with the management company.
Pricing for ETFs is continuous on the exchange; however a daily Net Asset Value (NAV) is calculated and published, based on closing exchange prices of the underlying investments. Unit Trusts are priced at 15:00 and this is the price at which they trade. ETFs are regulated not only by the Financial Sector Conduct Authority (FSCA), but also by the JSE as they are listed instruments. This means ongoing notices to investors must be published on the JSE messaging service (SENS) to notify investors of various events happening to and within the ETF. There is also a lot more detailed information about each ETF that must be published on the manager’s website.
Almost one year on now, the Sygnia team has definitely learned a lot. When db X-trackers was purchased, Sygnia shared its intention to launch some new funds, and to date, five new ETFs have been launched. As Sygnia Itrix initially only consisted of international ETFs, it made sense to first add two domestic ETFs to the range. The FTSE/JSE TOP 40 and the FTSE/JSE SWIX 40 indices were selected for the domestic funds. A further two ETFs tracking well-known international indices – the S&P Global Property 40 index and the S&P 500 index, were added. These four funds were launched at the end of October 2017 with management fees lower than any other funds on the JSE that tracked similar, or the same indices.
Then, in December 2018 the Sygnia Itrix 4th Industrial Revolution Global Equity ETF was launched. This ETF tracks the Kensho New Economies Composite Index℠, which is an index compiled and owned by Kensho Technologies Inc, a US ‘big data’ analytics company. This index blends exposure to 16 different Kensho market indices, each representing a different ‘new economy’ industry. Each index focuses on a different sector, including drones, robotics, space, wearables, cybersecurity, 3D printing, autonomous vehicles, nanotechnology, smart buildings, virtual reality, cleantech, genetic engineering and clean energy.
While still in the process of concluding the purchase of the db X-tracker ETFs, Sygnia was able to scrutinise how investors access and trade ETFs in South Africa. This led to the expansion of the Sygnia Alchemy LISP platform to accommodate for investment in ETFs alongside unit trusts and life funds. This also allowed Sygnia clients to include ETFs in their Retirement Annuities, Preservation Funds and Living Annuities. In fact, Sygnia now provides access to not only its own ETFs, but all other ETFs listed on the JSE.
One of the reasons why ETFs are not held by more retail investors is the perceived difficulty of access. Few investors have stockbroking accounts, and it seems the average investor assumes the only way to hold an ETF is through a stockbroker. This isn’t actually the case. There are a few platforms available, not only though Sygnia, where investors are able to invest in ETFs in a similar manner to investing in unit trusts. This includes the debit order facility.
Sygnia is still looking to expand its range of ETFs both domestically and internationally and is always looking at ways of educating investors on the benefits of including ETFs in their investment portfolio. At the end of Sygnia’s first year in the ETF space, the assets under management (AUM) for all 10 funds have grown to over R16.7 billion. “We are as enthusiastic about what we want to achieve with our ETFs and are looking forward to what the next year will bring”, says Sygnia Chief Operating Officer, Niki Giles.