The global exchange traded fund (ETF) market continues to expand rapidly, reaching US$14.85 trillion in assets under management (AUM) in 2024. This reflects a 10-year compound annual growth rate (CAGR) of 17.1%. South Africa is mirroring this global trend, led by Satrix, dominating the local market with 72.5%* of all ETF flows in 2024. When combined with its indexed unit trust flows, Satrix accounted for 50.5%* of all South Africa’s indexation flows. Fikile Mbhokota, Satrix** CEO, notes that the leading investment house saw ETF inflows grow by a staggering 127% year-on-year from 2023 to 2024.

Mbhokota further highlights that Satrix’s 2024 inflows exceeded that of 2023 by close to R5 billion, taking the Satrix AUM to in excess of R240 billion^ as of 31 December 2024. She attributes Satrix’s robust ETF growth to investors’ appetite for transparent, cost-effective investment solutions. She anticipates that this trend will continue into 2025 and beyond as South Africa follows the global trend of indexation adoption.

If we look at total flows across the local industry, it paints an interesting picture. The proportion of total industry flows into active strategies vs. indexed or rules-based alternatives (which include non-commodity ETFs and unit trusts) has changed dramatically. Over five years, the actively managed share of net flows was 64.3%, with the three-year number dropping to 43.5% compared to indexed alternatives. The past 12 months saw index strategies account for 87.8% of net inflows – clearly showing that the market has realised the value of index strategies in their portfolios.

Key Trends Shaping the Global ETF Market:

• Increased Adoption: ETFs are gaining traction globally due to their transparency, liquidity, and cost-effectiveness, spreading beyond the US to Europe, the Middle East and Africa (EMEA) and Asia-Pacific (APAC).
• ETF Savings Plans: In Europe, ETF savings plans are growing rapidly, with the number of plans set to quadruple over the next five years, according to BlackRock.
• Innovation: The global ETF industry set a record in 2024, with 1,787 new products launched in the first 11 months – a net increase of 1,234 after 553 closures. This surpasses the previous record of 1,619 launches over the same period in 2021. Cryptocurrency ETFs have dominated asset accumulation among new launches, led by iShares Bitcoin Trust (US$48.43 billion).
• Active ETFs: Active ETFs have outpaced mutual funds, particularly in the US, with a significant $3 trillion flow gap. This trend is gaining momentum in Europe.
• Institutional Adoption: Institutional investors are shifting to ETFs for their cost-efficiency, transparency and multiple use cases.
• European-Specific Drivers: Regulatory frameworks are impacting ETF adoption in Europe, supported by increased transparency and digitalisation.

South African ETF Industry Stats

As of December 2024, the South African Exchange Traded Product (ETP) market capitalisation reached R225.4 billion, reflecting a significant 36.2% growth compared to the previous year. This expansion was driven by R29.6 billion in capital raised through the listing of additional ETP securities on the JSE during the year, alongside the increase in market valuations year-to-date.

Kingsley Williams, Chief Investment Officer at Satrix, adds, “As a market leader in the ETF sector, Satrix will continue to drive local adoption by ensuring our local and offshore offerings meet the needs of our investors. With an ETF market capitalisation of R64.8 billion at the end of December 2024, our product offerings, such as the MSCI World, S&P 500, and Nasdaq 100 ETFs, have seen strong demand, particularly as South African investors look to diversify their portfolios globally.

“Investors are also increasingly using our other global ETFs, such as Global Bond, MSCI India and Global Infrastructure to better manage the diversification of their offshore exposure. In 2025, we’ll maintain our emphasis on offering cost-effective access while amplifying innovation as we explore new opportunities.”

Mbhokota concludes, “We believe South Africa will see continued growth in both equity and fixed-income ETFs, with an increasing share of investments flowing into internationally diversified funds. This growth is anticipated to be driven by both retail and institutional investors seeking cost-effective and transparent investment options that offer exposure to global markets. Investors are recognising the role ETFs can play in achieving a well-balanced, diversified investment portfolio, positioning ETFs as a core component of South Africa’s evolving financial ecosystem.”

*Source: Satrix and Morningstar, 31 December 2024

^Source: Satrix, 31 December 2024, AUM represents all assets managed in CIS vehicles (Satrix ETFs, Unit Trusts and UCITS), life pooled portfolios, assets managed via segregated mandates by Satrix as a division of Sanlam Investment Management and Satrix branded endowment funds managed by Sanlam Structured Solutions.

**Satrix is a division of Sanlam Investment Management

Other sources used:

• ETFGI
• Morningstar
• etfSA.co.za
• Introduction to ETFs: by State Street Global Advisers SPDR
• Goldman Sachs ETF Accelerator: The Growth of ETFs in Europe

This article was first published by Satrix here.

Disclaimer

Satrix Managers (RF) (Pty) Ltd (Satrix) is a registered and approved Manager in Collective Investment Schemes in Securities and an authorised financial services provider in terms of the FAIS.  Collective investment schemes are generally medium- to long-term investments. With Unit Trusts and ETFs, the investor essentially owns a “proportionate share” (in proportion to the participatory interest held in the fund) of the underlying investments held by the fund. With Unit Trusts, the investor holds participatory units issued by the fund while in the case of an ETF, the participatory interest, while issued by the fund, comprises a listed security traded on the stock exchange. ETFs are index tracking funds, registered as a Collective Investment and can be traded by any stockbroker on the stock exchange or via Investment Plans and online trading platforms. ETFs may incur additional costs due to being listed on the JSE. Past performance is not necessarily a guide to future performance and the value of investments / units may go up or down. A schedule of fees and charges, and maximum commissions are available on the Minimum Disclosure Document or upon request from the Manager. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. Should the respective portfolio engage in scrip lending, the utility percentage and related counterparties can be viewed on the ETF Minimum Disclosure Document.  International investments or investments in foreign securities could be accompanied by additional risks such as potential constraints on liquidity and repatriation of funds, macroeconomic risk, political risk, foreign exchange risk, tax risk, settlement risk as well as potential limitations on the availability of market information. For more information, visit www.satrix.co.za.