What is ETF?
An exchange-traded fund is a type of investment fund and exchange-traded product, i.e. they are traded on stock exchanges.
ETFs own financial assets such as stocks, bonds, currencies, futures contracts, and/or commodities such as gold bars.
What Is The Best Performing ETF In South Africa?
1. iShares MSCI South Africa ETF – Best ETF South Africa
Many South African investors simply want a simple way to invest in the South African stock market. The iShares MSCI South Africa ETF (EZA) helps you do exactly that.
This fund contains 37 of the top stocks on the Johannesburg Stock Exchange, including Firstrand, Impala Platinum, MTN Group, and more.
The South Africa ETF has lagged behind the global market over the past year, in large part because South Africa has been relatively slow to recover from the COVID-19 pandemic.
The fund lost 4.7% last year and has only returned 8.5% since inception since South African shares have lost more than they’ve gained in recent years.
2. Vanguard S&P 500 ETF – Best for Investing in the US Stock Market
The Vanguard S&P 500 ETF (VOO) is one of the most popular ETFs in the world, with a staggering 195 billion USD in assets under management. This fund tracks the US S&P 500 index and it contains 509 of the largest companies in the world.
The S&P 500 was one of the big success stories of last year, as the index – and VOO – gained over 31% despite the market crash in March.
Analysts are generally very bullish on the US stock market in 2022, so the S&P 500 could notch another year of big gains
3. SPDR S&P China ETF – Invest in China’s Growing Market
China was another big winner of the COVID-19 pandemic. Although the country suffered badly in the earliest days of the pandemic, China’s manufacturing and technology sectors recovered quickly.
In fact, China was one of the only countries in the world to see strong GDP growth last year. The SPDR S&P China ETF (GXC) reflects that – the fund grew by 42% last year.
This fund invests in nearly 2,000 of China’s biggest companies, so it’s a great way to invest in the world’s second-largest economy without navigating the complexities of the Shanghai Stock Exchange.
4. Lyxor Pan Africa UCITS ETF – Best ETF to Invest in African Stocks
The best ETF in South Africa might be one that invests not just in South Africa, but also its neighbors to the north. The Lyxor Pan Africa UCITS ETF (PAF) invests in the 30 largest stocks in Africa, including shares from the JSE, Egypt, Nigeria, and more.
PAF suffered badly when the market crashed last March and global trade seized up, but it has since recovered strongly from the COVID-induced lows. The fund lost 2.65% last year but is up nearly 8% over the past 5 years.
More important, this fund could take off in the years ahead. Foreign investments in Africa are ramping up as the continent modernizes, and a booming population is widely expected to bring countries like Nigeria onto the global economic stage.
5. iShares Russell 2000 ETF – Best ETF for Small-cap US Stocks
While the biggest names in the US stock market grab a lot of investors’ attention, there’s much more to the US market than just Amazon, Facebook, and Apple.
The iShares Russell 2000 ETF (IWM) attempts to mirror the growth of the Russell 2000 index, which tracks thousands of small- and mid-cap stocks that are all too often overlooked.
This ETF can be much more volatile than other US index funds. It fell more sharply during the coronavirus market crash – but it also rebounded more strongly. Last year alone, the fund returned a whopping 19.9%, and the gain from March onward was closer to 40%.
6. Vanguard Real Estate ETF – Best REIT for South African Investors
The Vanguard Real Estate ETF (VNQ) is potentially one of the best ETFs in South Africa for investors in search of a bargain.
It invests in over 100 different REITs and real estate companies, spanning residential, commercial, healthcare, and industrial real estate.
This fund dropped precipitously when office buildings emptied out in March and businesses closed. While it has largely recovered, the fund is still feeling the effects of a new pandemic normal in which commercial buildings are no longer at the center of people’s lives. The fund is currently trading at a discount relative to the individual stocks and REITs it contains, too.
7. VanEck Vectors Africa ETF – Best ETF to Invest in the African Stock Exchange
The VanEck Vectors Africa ETF (AFK) is another pan-African fund with a slightly wider reach than the Lyxor Pan Africa UCITS ETF.
AFK invests not only in companies based in Africa but in a number of mining and financial companies that generate at least half their revenue in Africa. In total, AFK has a portfolio of 74 stocks.
Thanks to that international exposure, this fund has drastically outperformed the Johannesburg Stock Exchange along with most South African companies. It returned 25.4% in 2020 and jumped up more than 4% in 2021. The fund has an expense ratio of 0.86% before dividend distributions.
8. SPDR S&P Metals & Mining ETF – Invest in South Africa’s Mining Industry
While not explicitly an ETF focused on South African companies, the SPDR S&P Metals & Mining ETF (XME) has a fair amount of exposure to South Africa’s mining industry.
The fund invests in stocks related to steel manufacturing in the US, gold mining in Africa, and mining for rare earth elements like lithium in China.
As demand for semiconductors and other precious metals skyrocketed last year, so too did XME’s price. The fund shot up 64%, despite losing 5% over the prior 10 years.
While the fund’s long-term performance is disappointing, it could be hard to put the genie back in the bottle when it comes to demand for metals. Electric cars, cryptocurrency mining, and renewable energy technology all demand huge volumes of metals, which should continue pushing up the prices of the companies that mine them.
9. Renaissance IPO ETF – Best ETF for Investing in Hot IPOs
The Renaissance IPO ETF (IPO) is an exciting and unique fund for South African investors who have a strong tolerance for risk.
The fund invests in new IPOs in the US stock market and holds them for up to 2 years after they go public. The idea is to capture the initial upside that many companies have experienced shortly after launching on the NYSE or NASDAQ stock exchanges.
10. ARK Innovation ETF – Top Performing ETF of 2022
The ARK Innovation ETF (ARKK) was one of the best-performing ETFs in South Africa last year. This fund, launched by guru investor Cathie Wood, returned over 146% for investors in 2020.
It’s been hit hard by the recent pullback in the US market, so now could be the perfect time to get in at a discount.
The fund is actively managed and seeks out young public companies with innovative business models and aggressive plans for growth.
Names currently in the portfolio include Tesla, Square, Teladoc, Zillow, and Shopify. The portfolio also includes some lesser-known companies operating in the fields of genetics, AI, and renewable energy.
Which ETF is high volatility?
The largest Volatility ETF is the iPath Series B S&P 500 VIX Short Term Futures ETN VXX with $426.00M in assets. In the last trailing year, the best-performing Volatility ETF was SVIX at 151.34%.