South Africa’s favourite ETFs in 2024

South African retail investors prefer to invest in exchange-traded funds (ETFs) focused on offshore indices, with the Satrix S&P 500 ETF among the most popular.

ETFs are becoming increasingly popular with investors and are set to become a $25 trillion (R453.76 trillion) industry by 2030.

Satrix CIO Kingsley Williams told Classic Business that ETFs are also a popular investment vehicle in South Africa.

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.

“There are quite a few reasons for this phenomenal take-up of what has been quite a revolutionary innovation in the investment world,” he said.

“Having full transparency daily of what an investment instrument or investment fund has inside of it – it’s been quite a revolutionary development and technological innovation within the financial services space.” 

Williams explained that index tracking – the foundation around which ETFs have been developed and offered – gives people certainty about the investment strategy a particular ETF is adopting.

This is because ETFs typically track indices constructed around clearly defined rules and systematic processes for capturing a particular strategy.

“Often, it’s termed ‘passive investing’, which I think most investors would infer that they’re getting market-cap-weighted exposure to a particular asset class or market segments,” Williams said. 

“But indices can be a whole lot more than just that. You can construct indices using any number of elaborate rules to deliver a particular investment outcome through time.”

Daily Investor contacted two popular investment platforms among local retail investors—EasyEquities and SatrixNOW—to gauge which ETFs South Africans prefer.

They provided the top five ETFs investors bought between January and June this year, revealing that South Africans prefer investing in ETFs focused on offshore indices.

Four of the five most-bought ETFs South Africans invested in through SatrixNOW fall into this category, with only the most popular, the Satrix Top 40 ETF, focusing on local indices.

Since the inauguration of the South African Listed Tracker Funds Awards, the Satrix Top 40 ETF has been voted the People’s Choice ETF for seven consecutive years. 

The Satrix MSCI World ETF – which ranked fourth among the most-bought ETFs by SatrixNOW clients – won this year’s new category of the People’s Choice ETF under the foreign fund category.

Satrix also provided the top 5 traded ETFs on the SatrixNOW platform, skewed towards offshore indices.

In this list, the Satrix S&P 500 ETF was the top-traded instrument, followed by the Satrix MSCI World ETF.

SatrixNOW’s data is largely in line with EasyEquities’ customers, who also prefer to invest in ETFs focused on offshore indices.

EasyEquities-owner Purple Group’s chief marketing officer, Carel Nolte, said the following trends have popped up among the platform’s users – 

• Crypto buys, including meme coins and crypto bundles, are gaining ground.
• Diversification is strong, with users investing across regions, asset classes and wallets.
• Far more users are accessing the platform’s free education and completing courses – there is a strong demand for research and education.
• Strong inflows have been seen on the Retirement Annuity side, with users wanting to hold more of their portfolio on one platform.

Among EasyEquities investors, the S&P 500 rules supreme, ranking first among the top-bought US and South African ETFs.

Among USD ETFs, investors prefer the Vanguard S&P 500, and among South African ETFs, the Satrix S&P 500.

SatrixNOW

Below is an overview of the most bought and traded ETFs among SatrixNOW users between January and mid-June.

EasyEquities

Below is an overview of the most popular local and US ETFs among EasyEquities users between January and mid-June.