TL;DR
An ETF (exchange-traded fund) is a basket of assets — for example, the top 40 JSE-listed companies — that trades on an exchange like a single share. ETFs are the most widely recommended starting investment for South African retail investors because they are diversified by default, low cost, and liquid. The most accessible way to buy JSE-listed ETFs in South Africa is through EasyEquities or Franc. For investors who want to practise decision-making before buying ETFs, Kora Markets Play provides a free simulation environment.
What is an ETF?
An ETF is a fund that holds a collection of assets — shares, bonds, commodities, or a mix — and trades on a stock exchange. When you buy one unit of an ETF, you are buying a proportional share of everything in that
fund.
The most popular ETFs for South African retail investors track indices — standardised lists of companies or assets. For example, the Satrix Top 40 ETF tracks the 40 largest companies listed on the JSE. When you buy one unit, you effectively own a tiny piece of all 40 companies simultaneously.
Why ETFs are recommended for beginners
Diversification by default: A single ETF can give you exposure to 40, 100, or even thousands of companies. This spreads risk across many assets rather than concentrating it in one.
Low cost: ETF annual fees (called the Total Expense Ratio, or TER) are typically between 0.1% and 0.5% per year. Actively managed unit trusts often charge 1–2%. Over 20 years, this fee difference compounds into a significant rand value.
Transparency: ETF holdings are published daily. You always know exactly what you own.
Liquidity: ETFs trade on the JSE during market hours. You can buy or sell at any point during the trading day, unlike unit trusts which are priced once daily.
Key ETFs available to South African investors
Satrix Top 40 (STX40): Tracks the 40 largest JSE-listed companies. The most straightforward South African equity ETF.
Satrix MSCI World (STXWDM): Provides exposure to over 1,500 global companies. For investors who want international diversification.
Ashburton 1200 Equity ETF: Tracks 1,200 global companies across 23 countries.
Sygnia Itrix MSCI USA ETF: Tracks US large-cap shares, providing exposure to the US market from a South African rand base.
Satrix Property ETF (STXPRO): Tracks listed South African property companies (REITs).
How to buy ETFs in South Africa
The most accessible platforms for ETF purchases are EasyEquities (broadest selection, fractional shares, TFSA accounts) and Franc (simpler interface, curated ETF selection, R10 minimum). Both are FSCA-registered. Both allow TFSA accounts, which is the most tax-efficient structure for most retail investors.
Frequently Asked Questions
Are ETFs safe? ETFs carry market risk — their value goes up and down with the assets they hold. They are not savings accounts and there is no capital guarantee. However, diversified ETFs are generally considered lower risk than individual shares because losses in one company are offset by gains in others.
What is a TER and why does it matter? TER stands for Total Expense Ratio — the annual fee charged by the ETF provider to manage the fund. A TER of 0.5% means you pay R50 per year for every R10,000 invested. Lower is better. For passive index-tracking ETFs, TERs should generally be below 0.5%.
Can I lose all my money in an ETF? For an ETF to go to zero, every single company in the fund would need to become worthless simultaneously. For a diversified index ETF like the Satrix Top 40, this is effectively impossible. You can, however, lose a significant percentage of your investment during market downturns. Long time horizons significantly reduce this risk.
What is the difference between a JSE ETF and a global ETF? A JSE ETF holds South African-listed assets. A global ETF (like Satrix MSCI World) holds international assets, giving your portfolio exposure to economies and currencies outside South Africa. Many financial planners recommend a mix of both for South African retail investors.