A quarter-century ago, Satrix launched South Africa’s first exchange traded fund (ETF). We were inspired by a radical idea: make investing accessible, affordable and effective for everyone.
At the time, ETFs were still gaining ground globally. In South Africa, they were unheard of. But with support from the JSE and seed capital from Sanlam, we took the leap. Today, index investing is mainstream, but the journey to get here came with big lessons.
Here are five we think matter more than ever:
1. Indexation Isn’t Just ‘Average’ – It Often Outperforms
When Satrix launched, the notion that you could track an index and still win seemed counterintuitive. But over time, the data tells a compelling story: net of fees, low-cost indexed strategies have consistently delivered above-average results, especially over long periods. For example, the Satrix All Share Index Fund A1 ranks third out of 24 unit trusts in the ASISA South African Equity General category that have maintained a 10-year track record to the end of April 2025, delivering an impressive, annualised return of 8.1%1. Furthermore, the Satrix 40 ETF, which was the genesis of the Satrix story, has delivered an even better performance at 9.0% p.a. over the last 10 years[2].
Despite a slow start, South Africans are now moving in this direction. In 2024, index funds across all ASISA categories attracted over 87% of net new flows[3]. The shift to rules-based investing is accelerating, not because it’s fashionable, but because the outcomes are better.
We didn’t follow trends. We followed conviction. And now the market is catching up.
2. Innovation Only Matters If It Solves Real Problems
Being first doesn’t guarantee success. What matters is solving for what investors actually need. That’s why we built local intellectual property, creating indices tailored to South Africa’s unique market structure – from high sector concentration to liquidity constraints. It’s also why we expanded beyond building blocks to full portfolio solutions, from our SmartCoreTM range to balanced funds.
Our early move into balanced funds brought an index-based approach to a space traditionally dominated by active management. Instead of trying to add value by tactically timing asset class exposures, we stuck to a well-considered strategic asset allocation based on thorough research and long-term conviction. Since its inception, the Satrix Balanced Index Fund A1 has been in the top quartile more than 70% of the time and outperformed the median more than 95% of the time on a rolling five-year basis, delivering one of the most consistent performance track records in the ASISA South African MA High Equity category4.
We brought index thinking into multi-asset portfolios, giving investors more than just parts – we gave them outcomes.
3. Scale Can Drive Real Financial Inclusion
As our funds grew, so did our ability to cut costs. We passed those savings on. When the Satrix MSCI World Index Fund scaled, we converted it into a direct fund – reducing fees for everyone. The Satrix Nasdaq 100 ETF followed a similar path.
We call it the double dividend: scale lowers costs, which boosts net-of-fee returns.
It’s not just about performance – it’s about performance that more people can afford to access.
4. Bridging Gaps Makes Markets More Inclusive
For years, ETFs were the preserve of direct investors, wealth managers and investment professionals, while financial advisers leaned on unit trusts. That left a gap. By pushing ETF availability onto Linked Investment Service Provider (LISP) platforms, we opened up a new channel – one where advisers and their clients could access the benefits of indexing without changing platforms.
We helped bridge the divide – and in doing so, widened the path to inclusion.
5. Basics Matter
Younger investors – Gen Z and Gen Alpha – are looking for cost effective and flexible investments without compromising returns. They want to be able to start small and not be penalised. That’s especially true in a country like South Africa, where affordability and unemployment are real challenges. That’s why convenient access, no minimums, a wide range of investment choice and compelling long-term returns remain our focus.
Looking Ahead: The next chapter of access
Indexation is still gaining ground globally – and South Africa is no different. With 25 years of performance data now behind us, the case is stronger than ever. As we move forward, we will keep expanding the options for people to access investments. This includes digital platforms, new investment strategies, and addressing use cases that we have not yet tackled. By leveraging fintech and promoting ongoing innovation, we aim to further reduce barriers that might discourage first-time investors.
Globally, we’re seeing indexation and investment innovation continue to grow, especially in the US, and increasingly in Europe. South Africa is on the same path. Now that local investors have 25 years of performance history, investors are increasingly seeing the same “proof in the pudding”.
Critics sometimes argue that index funds “guarantee underperformance” because they don’t offer any outperformance of the index after fees. But that’s the wrong question as you can’t invest in an index itself. The right question is: how do funds tracking an index perform relative to any other fund available on the market? And over 10+ years, the data is clear – low-cost indexed strategies regularly outperform a significant majority of actively managed peers. That’s what matters.
Sources:
- 1 Morningstar, as at 30 April 2025
- 2 Morningstar, as at 30 April 2025
- 3 Morningstar & Satrix, as at 31 December 2024
- 4 Morningstar & Satrix, as at 30 April 2025
Disclaimer
*Satrix is a division of Sanlam Investment Management
Satrix Managers (RF) (Pty) Ltd is an approved financial service provider in terms of the Financial Advisory and Intermediary Services Act, No 37 of 2002 (“FAIS”). The information above does not constitute financial advice in terms of FAIS. Consult your financial adviser before making an investment decision. While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSP, its shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information.
Satrix Managers (RF) (Pty) Ltd (Satrix) is a registered and approved Manager in Collective Investment Schemes in Securities. Collective investment schemes are generally medium- to long-term investments. With Unit Trusts and ETFs, the investor essentially owns a “proportionate share” (in proportion to the participatory interest held in the fund) of the underlying investments held by the fund. With Unit Trusts, the investor holds participatory units issued by the fund while in the case of an ETF, the participatory interest, while issued by the fund, comprises a listed security traded on the stock exchange. ETFs are index-tracking funds, registered as a Collective Investment and can be traded by any stockbroker on the stock exchange or via Investment Plans and online trading platforms. ETFs may incur additional costs due to being listed on the JSE. Past performance is not necessarily a guide to future performance and the value of investments / units may go up or down. A schedule of fees and charges, and maximum commissions are available on the Minimum Disclosure Document or upon request from the Manager. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. Should the respective portfolio engage in scrip lending, the utility percentage and related counterparties can be viewed on the ETF Minimum Disclosure Document. A fund of funds portfolio is a portfolio that invests in portfolios of collective investment schemes that levy their own charges, which could result in a higher fee structure for the fund of funds. International investments or investments in foreign securities could be accompanied by additional risks such as potential constraints on liquidity and repatriation of funds, macroeconomic risk, political risk, foreign exchange risk, tax risk, settlement risk as well as potential limitations on the availability of market information.
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