Listing on lockdown: Satrix launches SA Bond ETF


Look at this blog heading, pretty epic for its alliterations right? While I pat myself on the back for the awesome wordplay, something more epic is afoot. The listing of an instrument on the JSE during the lockdown is unprecedented and even more epic. Satrix are set to launch and list the Satrix SA Bond Exchange Traded Fund this Thursday, 07 May 2020. 

What is so special about listing during the national lockdown

It has never been done before. It's a testament of the era we live in to see a company continue with operations in a time when other businesses have put a halt to, or at least slowed down, operations. As if that wasn't enough, people would still be  able to attend the launch - remotely.

Satrix along with the JSE, EasyEquities, and CN&Co are breaking the mould by having a fully-digital listing event, where attendees can bear witness to the debut of the new ETF via the comfort of their own homes or offices. 

The listing tradition is that a company's representatives and invited guests pile into the JSE Headquarters to sound the opening bell (or horn, in South Africa's case). Now, we can drink coffee and snack on whatever is around from the comfort of our pajamas and boxers. Sounds like a win to me. 

Why do companies list in the first place

EasyEquities covered this topic a few years back, but we're more than happy to recap. Simply put, companies list their shares and products on the stock exchange to raise capital in order to grow their businesses. More funds received from investors, the more a business can expand and improve on operations. 

In the case of Exchange Traded Funds, they work on the same principles as businesses. Although they offer collectivised investment vehicles/products, they too require funds to purchase the underlying assets and to grow their product accessibility.

Why bonds?

I hit up my friend and head of Research at Easy to enlighten me. Here's what Barry 'The Beef' Dumas had to say: 
"Diversification. During volatile times like we are experiencing now it makes sense to add bonds into your portfolio as bonds have a low correlation to equities. So, when the Equity market moves lower, bonds may act defensively and perform better as investors seek safety. By adding bonds to an equity only portfolio, the investor can create a more balanced portfolio which can roll with the punches."

More about the Satrix SA Bond ETF

The new Satrix SA Bond ETF tracks the S&P South Africa Sovereign Bond 1+ year Index. This is a total return ETF, which means all coupons are automatically re-invested.

The S&P South Africa Sovereign Bond 1+Year Index includes Rand denominated sovereign debt publicly issued by the government of South Africa, with maturities of one year or more. It is a market value weighted index that is rebalanced monthly.