Manager Research

We recently completed our review of the Satrix All Share Index fund, Satrix MSCI World Equity Tracker fund and Satrix MSCI World Equity Index Feeder fund and have retained our ratings across these funds. On the business and shareholder side, although Sanlam Investment Management has recently merged with Absa Asset Management, there is limited impact on the Satrix business. We also see that Satrix has cemented its lead in the passive management industry in South Africa, with scale being a key competitive advantage of the business. Assets under management have grown significantly which is particularly important for passive businesses.

The investment team is experienced and has recently made some new hires which adds to team depth.

We continue to rate Satrix’s ability to manage passive investment products highly but retain our skepticism on the smart-beta range of products. We are of the view that these products are difficult to manage in South Africa’s narrow investment market. In addition, we still believe that the Satrix MSCI World Equity Index Feeder Fund is somewhat expensive, which is why the fund retains its Tier 2 rating.

Portfolio Construction Methodology - Changes

From the 1^st of March 2024, the SWIX range of funds will merge with the respective All Share Index fund. This is because the JSE is in the process of harmonizing the JSE All Share Index calculation methodology with the SWIX calculation methodology as there are now minimal differences between the indexes due to recent corporate actions. The calculation methodology will be based on the SWIX calculation methodology, but the indexes will retain the All Share Index nomenclature. The effect of this is a slightly lower weighting of Rand hedge stocks (3% to 4%) in the All Share Index than is currently the case.

The Satrix MSCI World Equity Index Feeder Fund has also changed its portfolio construction methodology to invest directly in the underlying stocks in the Index instead of investing in the Satrix MSCI World Equity Tracker Fund and has amended the name on this fund to the Satrix MSCI World Index Fund.

Both changes make sense to us, and we continue to believe in the investment proposition of all four of these funds. 

Below, we provide a summary of our fund ratings.