Know your Holdings: Satrix RESI ETF

Valuable resources can refer to a wide range of assets or commodities that hold significant worth or importance. These can include minerals (such as gold, platinum, and diamonds), and fossil fuels (like oil, natural gas, and coal). The Satrix RESI is an Exchange Traded Fund that tracks companies in the resources industry.

Although JSE has a lot of miners and companies that are within the space, the Satrix RESI ETF is one of the exchange-traded funds that exposes investors to the top 10 resource companies included in the JSE Capped Resources 10 index.

Disclaimer: The holdings may not be limited to the logos on the image and may change. The use of logos are for educational purposes only.

Resources involve mining and, in South Africa like many other industries, are sensitive towards Political, Economic, Social, Technological, Legal and Environmental (PESTLE) factors. Two of these can include trade relations between countries and the load-shedding problem in the local country.

Satrix RESI ETF

The fund invests in companies that are involved in gold mining (25.9%), platinum & precious metals (22.8%), general mining (40.5%), and chemicals diversified (8.9%).

It's worth noting that the underlying index that this ETF tracks is a capped index; which means that the the companies have a maximum percentage in terms of their weighting in the index, based on their market capitalization. This is adjusted every three months. This is done to ensure that the index remains diversified and does not become too concentrated in any single security. Here's the fund factsheet.

The Satrix RESI ETF is also exposed to gold, and generally, there is a negative relationship between the price of gold and the value of the dollar. When the dollar appreciates, gold becomes relatively expensive, which leads to a lower demand for the commodity, thus resulting in a lower price.

The dollar index – which is an index that measures the value of the dollar against a basket of currencies – has dipped 2.3% year-to-date, while gold is up 9.2%. Reasons for the weaker dollar include weak real GDP growth in the US for Q1 2023 and expectations that the Federal Reserve will halt its rate-hiking cycle as inflation appears to have peaked. Read more here.

The mining sector is one of the biggest consumers of energy in the country. Many miners have started shifting towards self-reliance on energy (renewable/clean) in an attempt to ditch the rising energy costs and blackouts, given its impact on many mining companies' output to meet demand.

Some of these companies include Anglo American PLC, which expects to begin construction this year; Anglo American Platinum Limited, which aims to have its 100MW solar photovoltaic (PV) plant operational by the end of 2023; and Sibanye Stillwater Ltd, with the Castle Wind Farm where construction was expected to commence by June 2023.

Dividend

The RESI ETF has a 4.88% dividend yield. The last dividend payout, as of writing, was paid in April 2023.