Nerina Visser identified one Actively Managed Certificate (AMC) and two Exchange-Traded Funds (ETF) at a JSE SA Stock Picks event – 10x Total World ETF, Satrix Capped All-Share ETF, and Coherent Capital Global Commodity AMC.
Visser has over 20 years of experience as an Exchange-Traded Product strategist and financial advisor.
She previously served as the president of CFA Society South Africa and is now the director and co-owner of etfSA Portfolio Management Company.
She is, therefore, well-positioned to advise investors on which ETFs and AMCs offer good value and are worth a look.
Visser said she is more interested in long-term investing than short-term speculative trading, and her picks reflect this strategy.
Below are Visser’s top three JSE-listed stock picks.
10x Total World ETF (GLOBAL)
“If I only ever had to make one investment and never look at it again, this would be the ETF I would buy,” Visser said.
She explained that this ETF invests in an index tracker fund, which covers over 9,000 companies globally.
These companies are located in developed and emerging markets and include large, mid and small-cap stocks.
“It is truly the most diversified equity exposure globally that you can get,” she said.
Visser said the benefit of this type of index tracker fund is that the index effectively accommodates shifts in the global investment landscape.
For example, as emerging markets grow over time, so will the prominence of these markets in the index.
She said the underlying investment of this ETF is the Vanguard Total World Index, one of the largest, most liquid and most cost-effective ETFs available in the world.
Vanguard was founded by Jack Bogle, known as the Father of Index Investing.
This 10x ETF brings this investment opportunity to South Africans through the JSE, where one is able to buy it at a “very, very attractive rate”, Visser said.
She explained that the fund has a total expense ratio (TER) of only 0.29%, which is just marginally more than the 0.25% Security Transfers Tax investors pay when they buy individual shares on the JSE.
The 10x Total World ETF also declares dividends twice a year.
For Visser, one of the biggest advantages of investing in this ETF is that it does not count as part of one’s yearly offshore allowance.
Satrix Capped All-Share ETF (STXCAP)
Visser said the Satrix 40 was the first ETF to list on the JSE back in 2000 and tracks the top 40 companies JSE-listed companies.
However, when looking at these 40 companies, many of them are global and international companies.
Visser, therefore, prefers the Satrix Capped All-Share ETF, which tracks the top 40 JSE-listed companies but is also exposed to mid and small-cap shares on the JSE.
She said this is the only ETF that will expose investors to JSE-listed small and mid-cap shares.
The benefit of investing in smaller-cap companies is that over longer terms, they bring better returns than large-cap stocks, she explained.
“While these companies are risky to invest in individually, by having a basket of mid and small-cap stocks that trade differently, you get good diversification and risk reduction,” she said.
This ETF currently has a TER of 0.15%.
Coherent Capital Global Commodity AMC (CCMGCZ)
Visser recommended this ETF for investors interested in exposure to asset classes other than equities.
She said the South African economy and the JSE were built on the gold mining industry and the physical commodities the country mines, which are a great diversifier in an investor’s portfolio.
While one can buy shares in mining companies, it is different from buying the physical underlying commodities.
However, commodities do not pay dividends, and they do not have an upward-sloping trend line like stocks – they are very cyclical.
Visser, therefore, likes the Coherent Capital Global Commodity AMC, which will expose investors to an actively managed basket of commodities.
She said it is important to have someone who understands the cyclical nature of these commodities to manage the investment.
The benefit of this AMC is that it covers a broad spectrum of commodities, including gold; platinum group metals; industrial and precious metals; commodities on the energy spectrum like oil, natural gas, and coal; cattle; and cocoa.