A R1,000 investment in the S&P 500 on 1 January 2023 would have grown to R1,291 by 14 September, while the same investment in the JSE Top 40 would have shrunk to R991.
South Africa’s stagnant economy and the rand’s volatility caused many retail investors to reconsider where to invest their money.
Apart from the option to invest in local and international companies on the JSE, people can also invest in exchange-traded funds (ETFs).
ETFs are similar to unit trusts, where money from many investors is pooled. However, instead of being under the control of a fund manager, it tracks a particular index.
Two of the most popular indexes among South African investors are the S&P500 and the JSE Top 40.
- S&P 500 – The Standard and Poor’s 500 tracks the stock performance of 500 of the largest companies listed on US stock exchanges.
- JSE Top 40 – The FTSE/JSE Top 40 index comprises the 40 biggest companies in the JSE All-Share Index.
It raises the question of which index achieved the best return for South African investors in 2023.
An analysis shows that the S&P 500 significantly outperformed the JSE Top 40 between 1 January and 14 September 2023.
A R1,000 investment in the S&P500 would have grown to R1,291 – a 29.1% increase over the 8-month year-to-date period.
This investment benefitted from the growth in the US market and the weakening of the rand.
Of the 29.1% increase, approximately 11% was attributed to the weakening of the rand and 18% was attributed to the growth in the US stock market.
A R1,000 investment in the JSE Top 40 would have fallen to R991. It translates into a 0.85% loss in the year to date and an annualised loss of 1.2%.
The local market enjoyed a good start to the year, but record load-shedding and aggressive monetary policy tightening hampered growth.
JSE Top 40 versus S&P 500
The chart below shows the performance of R1,000 invested in the JSE Top 40 and S&P 500 on 1 January 2023.