Satrix MSCI World Islamic Feeder ETF

Listed on the Johannesburg Stock Exchange on the 22^nd October 2024, the Satrix MSCI World Islamic Feeder ETF is South Africa’s first Shariah compliant exchange traded fund (ETF) with offshore exposure – as it feeds into the iShares MSCI World Islamic UCITS ETF run by Blackrock.

“There are many benefits of doing so because we can tap into the experience of a larger investment team,” explained Satrix Head of Exchange Traded Products Yusuf Wadee.

As the investment objective is to track the movement of the MSCI World Islamic Index, termination of the underlying Blackrock fund will see it replaced with another that is suitably similar – subject to necessary regulatory approvals and due processes.

Priced in South African rand, the feeder fund reference ratio is 100,000 Satrix units to 5,000 in the iShares ETF. While the fund owner is Satrix Managers, the management of investments is outsourced to Sanlam Investment Management – with the Sanlam Private Wealth team acting as market makers.

Pitched at a range of investors – from retail to institutional – this ETF’s risk profile is classified as having an aggressively managed, high-risk portfolio that aims to deliver capital growth over the long term. “Investors should expect and be able to withstand equity volatility over the short term.”

Following the underlying fund’s strategy, this Satrix ETF will be invested in large and mid-capitalization segments of 23 developed markets. “You are literally choosing from the cream of the crop, high-quality stocks of companies that exist globally,” noted Yusuf.

“The fund’s exposure to technology is about 38%, which is higher than the 32% of the MSCI World Islamic Index, as we feel that technology does qualify as a better Shariah compliant investment. What’s interesting is that our fund’s stocks are in broad-based technologies, unlike the MSCI index.”

With a higher percentage in technology stocks, Yusuf said the Satrix ETF does not follow the MSCI index to invest in any financial stocks. The focus is on around 300 counters overall, including higher on healthcare and energy stocks, as these fit better into the fund’s Shariah mandate.

With the underlying fund slated to distribute the income from the constituents of the index quarterly, a similar schedule will be applied for this Satrix ETF – with distributions planned for periods ending in March, June, September and December in each year of all income received.

As an additional step, Yusuf said that Satrix will further purify the dividend according to its domestic Shariah advisory team before distribution.

*Disclaimer:  The opinions and viewpoints expressed in the Fund Profile do not constitute as a recommendation for any funds highlighted. The information presented is not investment advice and should not be treated as such. 

Source: Satrix