Satrix, best known for its index-tracking exchange traded funds, has listed its first actively managed ETF, focused on income generation, on the Johannesburg Stock Exchange.
The Satrix Income Actively Managed ETF was listed on 29 January. According to the company, the fund is intended for investors seeking higher income than traditional money market products, while maintaining a conservative risk profile.
Satrix says the decision to introduce an actively managed product reflects its assessment of the short-term fixed-income market, where commonly used benchmarks serve as performance indicators rather than investable portfolios. The company argues this makes active portfolio construction necessary to select among a wide range of income-generating instruments.
Investment management for the ETF has been appointed to Sanlam Investment Management. Satrix says the portfolio will be actively positioned across income-yielding securities in response to changes in the interest-rate environment, based on the investment manager’s assessment of market conditions rather than a rules-based index.
According to the issuer, the fund will invest primarily in predominantly liquid South African interest-bearing assets, including negotiable certificates of deposit, floating rate notes, Treasury Bills, and other fixed-income instruments permitted under the applicable regulatory framework.
The ETF may also hold limited exposure to listed property securities, in line with the ASISA South African multi-asset income category limits.
Satrix says the investment objective is to generate income while seeking to limit capital loss over any rolling six-month period, noting this objective is subject to market conditions and that capital preservation is not guaranteed.
The company says the fund is designed for investors with a minimum investment horizon of three months and is positioned between a call account and a traditional bond fund in terms of its intended risk and return characteristics.
According to the fund’s Minimum Disclosure Document, Satrix has adopted the repo rate plus 0.75% as a benchmark reference for the portfolio, although it notes this is not a guaranteed outcome, and performance will depend on prevailing market conditions.
The MDD also states that the ETF is expected to make income distributions on a quarterly basis, subject to the level of income generated by the underlying portfolio.
The ETF will be managed in accordance with Regulation 28 of the Pension Funds Act.
Yusuf Wadee, the head of exchange traded products at Satrix, said the ETF structure allows the firm to combine active investment decisions with the transparency and tradability associated with exchange traded products. He said the structure is intended to provide flexibility and liquidity for income-focused investors.
The ETF lists with a targeted total expense ratio of 0.46%. Satrix describes this fee level as competitive within the income investment category.
Units in the ETF trade intraday on the JSE, allowing investors to buy and sell during market hours rather than transacting at end-of-day net asset value, as is the case with traditional unit trusts.
Satrix also says the product is aimed at investors who hold surplus cash for longer than initially planned, arguing that an income-focused ETF may offer an alternative to leaving funds in low-interest transactional accounts over extended periods.
The launch forms part of Satrix’s expansion into actively managed ETPs, which the company says reflects growing interest in such structures, particularly in fixed-income markets where it believes index-based approaches may not capture the full range of available investment opportunities.
