What 25 Years as a Market Pioneer Taught Us About South African Investing - South Africa Today
South Africa, 5 June 2025: 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:
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 years2.
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 flows3. 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.”
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.”
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.”
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.”
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.
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.
