NewFunds NewSA Index ETF

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Suitability: Social investing is gaining momentum globally as more and more people become conscious of “ethical” investing. The NewSA ETF is peculiar to SA and born out of SA’s historical imbalances.

Since 1994, the democratically elected government has pursued various channels to address financial imbalances created by Apartheid, with broad-based black economic empowerment (BBBEE) the cornerstone of its policy. The NewSA ETF invests in companies with superior BBBEE ratings and is thus suitable for investors who feel morally impelled to invest to support transformation – or if you believe that companies with superior empowerment ratings have an economic edge.

The fund consolidates 40 such companies and you can cost-effectively gain exposure through a single transaction. Its constituents are drawn from the FTSE/JSE Top 40 index, but with weightings determined by their empowerment (BBBEE) ratings. The BBBEE ratings are calculated by Empowerdex, but the index is constructed using the FTSE/JSE methodology.

What it does: The fund tracks the price performance of the NewSA index, which is a modified FTSE/JSE Top 40 index that weights the top 40 JSE-listed companies according to their empowerment ratings.

Risk: For some industries, such as retail, BBBEE ratings are not mandatory. So the trend is that those with BEE scorecards like banks and mining companies and those that generate some business from state entities have high BBBEE ratings. The implication is that the performance of constituents is likely to be correlated, that is, constituents perform well/poorly at the same time.
This is a pure equities investment, so the performance is likely to be more volatile than other asset classes such as bonds or cash.

Fees: For the year to end-March, 0.58% of the average net asset value of the portfolio was incurred as charges, levies and fees related to the management of the portfolio.

Historical performance: The fund’s performance depends on how you invest – through a single lump-sum payment or regular payments. The table below reflects the fund’s historical annualised returns for a lump-sum investment.

Alternatives: There are no direct peers.