New ETF Tracking Chinese Stocks Launches In SA

While the increased choice of global exchange-traded funds on the JSE is welcomed, Simon Brown does warn against concentration risk that comes with the new Satrix ETF tracking the MSCI China Index.

- Simon Brown

Satrix is launching a new exchange-traded fund (ETF) this month that will track Chinese stocks. This is a first for the JSE; there was an exchange-traded note (ETN) from Deutsche Bank which was delisted in January. This new ETF will be eligible to be included in your taxfree investment portfolio and, of course, in a discretionary investment portfolio.

This new ETF is a feeder fund, which means Satrix will be buying the iShares MSCI China UCITS ETF issued by BlackRock. This does help the process and reduce costs, but the total expense ratio will still be 0.63%. This is higher than we’re used to with most general-market ETFs in South Africa. But emerging market ETFs are generally more expensive due to smaller fund sizes and the challenges that come with buying emerging-market assets and currencies.