Satrix Revamps Portfolio: Enhanced Investor Benefits Ahead

Satrix Managers (RF) Pty Ltd has announced proposed changes to its Satrix Quality South Africa Portfolio, aimed at providing a more streamlined and efficient investment experience for its clients. The changes include a shift in the portfolio’s index and a rebranding, transforming it into the “Satrix Quality South Africa ETF.” Here’s what South African investors need to know about these developments.

Index Shift and Reasons Behind It

Satrix is planning to replace the current benchmark index, the S&P Quality South Africa Index, with the Satrix Quality Index. This decision follows a thorough evaluation of the portfolio’s investment strategy and objectives. The shift is underpinned by several compelling reasons:

1. Consistency: The Satrix Quality Index aligns with Satrix’s existing investment indices, including the Momentum and Value indices, ensuring a more consistent approach to capturing quality in the South African market.
2. Optimisation: The proprietary Satrix Quality Index employs an optimiser to consider stock, sector, liquidity, and tracking error risks while limiting turnover/churn at each rebalance. This approach leads to improved portfolio management.
3. Reduced Costs: By controlling turnover during semi-annual rebalances, the Satrix Quality Index helps lower transaction costs, contributing to more cost-effective investment solutions for clients (around 20% per annum).
4. Risk Reduction: The Satrix Quality Index follows corporate events in line with the FTSE/JSE index treatment, reducing tracking errors relative to the index it tracks.

Name Change

In addition to the index shift, the portfolio’s name will change from “Satrix Quality South Africa Portfolio” to “Satrix Quality South Africa ETF.” This alteration reflects the portfolio’s evolution towards a more exchange-traded fund (ETF)-like structure, while the JSE code and ISIN will remain unchanged, preserving trading and financial history continuity.

Investor Impact

One of the most critical aspects of these changes is their impact on investors. Fortunately, there is no adverse effect on investors within the Satrix Quality Index resulting from the proposed alterations to the investment policy.

Action Required

Investors are urged to review the announcement carefully, considering its implications for their investments. A ballot form is provided, allowing investors, brokers, and CSDPs to vote on the proposed changes. Ballot responses must be submitted to KPMG by October 26, 2023. Importantly, investors are advised against including any other instructions with their ballot forms.

Timelines

The proposed changes have a timeline attached to them. The record date for the changes was September 11, 2023. Pending successful ballot voting and approval by the Financial Sector Conduct Authority, the effective date of the change in investment policy is set for December 1, 2023.

Charges, Performance, and Pricing

Investors will not incur any additional fees or charges as a result of the change in investment policy, ensuring a seamless transition.

Investor Rights and Alternatives

Investors have the right to vote on these proposed changes, as per the regulations outlined by the Registrar of Collective Investment Schemes. Investors not wishing to stay in the Satrix Quality South Africa Portfolio can switch to another Satrix Portfolio. Those uncomfortable with the proposed changes can also opt to sell their units and withdraw funds before December 1, 2023.

Conclusion

Satrix Managers’ proposed changes to the Satrix Quality South Africa Portfolio reflect their commitment to optimizing investment strategies and providing consistent, cost-effective solutions for clients. South African investors are encouraged to review the details carefully and exercise their voting rights to shape the future of this investment offering.