Real Estate Investor Magazine South Africa December 14/ January 15 | Page 53

LISTED

BY MIKE BROWN

Passive index tracking
Exchange Traded Funds (ETFs)
A

Get the best returns on your investment
with passive index tracked ETFs

s more investors become aware of the merits of
listed property shares as an asset class in their
own right, the vehicles available to invest in
these products are coming under increasing scrutiny.
These have now risen to a market capitalisation of
over R400 billion, more than double the level they
were at only two years ago. This increase in market
capitalisation has provided both greater liquidity, as
well as greater choice; as investors have shifted from
running their own property portfolios, or investing
directly in property, to indirect investment through
listed property shares.
There are 26 unit trusts available through the overthe-counter market in South Africa that invest purely
in listed property shares. The Unit Trust Manager
will select the listed property shares they believe offer
superior returns.
Given the high returns of the SA Listed Property
Index, there is a case to be made for the greater
consistency of performance, lower costs and reduced
risk (volatility) associated with using index tracking
products to give exposure to the listed property sector
on the Johannesburg Stock Exchange ( JSE).
There are two passive index tracking unit trusts
available to the retail public in South Africa. They are
the Satrix Property Index Fund and the Sygnia Listed
Property Index Fund.
Three ETFs track the listed property sector and are
themselves traded as securities on the JSE. The JSE
listing provides greater transparency and liquidity than
unit trusts. JSE rules for ETFs require the issuers to
exactly replicate the index by offering physical swaps
between the index constituent baskets and the ETF
securities. This is a pure form of index tracking and
significantly reduces tracking errors by issuers. The top
three property ETFs available on the JSE are:
1. Stanlib SA Property: tracks the FTSE/JSE SA
Property Index (SAPY), incorporating the top
21 listed property shares on the JSE measured by
www.reimag.co.za

market capitalisation, liquidity and free float.
2. Grindrod Proptrax SAPY: tracks the same FTSE/
JSE index as the Stanlib Property ETF.
3. Grindrod Proptrax 10: tracks a composite index
of the top 10 listed shares on the JSE, selected
by market capitalisation, with the funds equally
weighted (10% each) between these top shares.
Total Return Performance*
SA Passive (Index Tracking) ETFs/Unit Trusts
Fund

6
Months
(%)

1
Years
(%)

2 Years
(% p.a.)

3 Years
(% p.a.)

18,18

19,06

15,12

21,58

3

3

5

2

12,71

13,56

12,38

19,61

Exchange Traded Funds (ETFs)
Grindrod Proptrax Ten ETF
Ranking in Quarterly Performance Survey
Grindrod Proptrax SAPY ETF
Ranking in Quarterly Performance Survey

Ranking in Quarterly Performance Survey

12

22

16

13

12,50

14,22

n/a

n/a

11

17

11,53

Stanlib Property Index Fund

14,21

11,68

n/a

22

18

21

11,40

13,98

n/a

24

21

Unit Trusts
Satrix Property Index
Ranking in Quarterly Performance Survey
Sygnia Listed Property Index
Ranking in Quarterly Performance Survey
*
Source:

n/a

Includes reinvestment of all dividends.
ASISA Quarterly Unit Trust Survey (September 2014).
Rankings out of 31 Property Unit Trusts/ETFs.

Note:

Historic investment performance may not be replicated in future.

The performance table above shows the superior investment performance of
the Proptrax Ten ETF, which not only outperforms the other passive ETFs/unit
trusts, but also competes with the very best actively managed property funds.

RESOURCES
etfSA.co.za
December 14 / January 15 SA Real Estate Investor

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