A quiet but powerful revolution is transforming how South Africans build their wealth. On the digital frontlines of platforms like EasyEquities, a new contender is decisively outpacing an old favorite. Actively managed Exchange Traded Funds are now being purchased 30% more than traditional unit trusts, signaling a dramatic shift in investor preference towards flexibility, transparency, and control.
This isn’t just a fleeting trend. It represents a fundamental change in the relationship between everyday investors and the financial markets, driven by technology and a demand for fairness.
Why the Sudden Shift?
The appeal of active ETFs lies in a powerful combination of the best features of different investment products. They offer the strategic, hands-on management of a traditional unit trust, where a fund manager actively picks stocks to try and outperform the market. But they wrap this strategy in the efficient, transparent shell of an ETF.
Because they are listed on the JSE, they trade like shares, offering real-time pricing and the ability to buy and sell throughout the trading day. This provides a level of control and liquidity that unit trusts, which are priced only once a day, cannot match. For a generation of investors raised on smartphones and instant information, this is a game-changer.
The Fairness Factor: A Single Fee for All
Perhaps the most profound change is the democratization of fees. The traditional unit trust model often had multiple fee classes, where large institutional investors paid less than the average retail saver. Actively managed ETFs shatter this model.
On the JSE, these ETFs have a single fee class and a single Total Expense Ratio. This means whether you are investing R100 through your phone or R10 million on behalf of a pension fund, you pay exactly the same percentage fee. This promotes a radical sense of fairness and transparency, finally removing a barrier that has historically put the small investor at a disadvantage.
A Local Market Poised for Explosive Growth
The South African active ETF market is still in its infancy, but the growth potential is staggering. Currently, the local market is a tiny fraction of the global scene, meaning there is massive room for expansion.
The entry of major asset managers like Coronation into the ETF space was a watershed moment, proving the model’s credibility and prompting a wave of new listings. With platforms like EasyEquities making access seamless, and with a conviction that South Africa’s “world-class” asset managers can outperform the market, the conditions are perfect for this market to not just grow, but to potentially outpace more developed countries.
The message from the front lines is clear. The era of the passive, high-fee investment product is being challenged. South African investors are voting with their wallets, and they are choosing a smarter, fairer, and more flexible way to grow their wealth. The revolution is being traded, one click at a time.
