Satrix launches smart city infrastructure feeder ETF

One of the biggest investment ‘megatrends’ currently at play globally, is the emergence of smart cities, due to rapid urbanisation around the world. Smart cities use technology to enhance the quality of life of residents, from air quality and transportation to health and safety alerts. Satrix, one of South Africa’s leading index investment business, is offering investors access to this rapidly growing investment opportunity through its new Satrix Smart City Infrastructure Feeder ETF.

The fund’s IPO goes live on 28 June, with listing planned for 26 July 2022. It is the latest under the Satrix megatrends strategy, which seeks exposure to powerful and transformative forces that are predicted to change the trajectory of the global economy. Blackrock, the world’s largest asset manager, has shortlisted technological breakthrough; demographics and social change; rapid urbanisation; and climate change and resource scarcity as among the long-term megatrends that will have “irreversible consequences for the world around us”.

Under the rapid urbanisation trend, the United Nations predicts there will be at least 43 megacities in the world by 2030, each with 10 million or more inhabitants, and each requiring new and innovative ways to develop, maintain and manage infrastructure. Research by McKinsey Global Institute also supports that technology will play a role in enabling smart cities that will deliver key enhancements to the quality of inhabitants’ lives. 

In this context, the Satrix Smart City Infrastructure Feeder ETF tracks the performance of companies that help to turn cities into smart cities, as an alternative to the traditional infrastructure plays. The focus on nimbler companies offering infrastructure services over major infrastructure assets is illustrated by the sectoral exposures in the underlying index which include industrials (47.4%) information technology (36.8%), communication services (6.3%) and materials (3.4%).

Smart city focused indices also offer the advantage of being aligned to the UN Sustainable Development Goals (SDGs) and feeds into a Sustainable Finance Disclosure Regulation (SFDR) Article 9 product, satisfying the appetite among local institutional and retail investors for impactful and sustainable investments.

The Satrix Smart City Infrastructure Feeder ETF will track the STOXX Global Smart City Infrastructure Index, which invests in a minimum 80 component holdings that contribute to SDG 6: Clean Water and Sanitation; SDG 7: Affordable and Clean Energy; SDG 9: Industry, Innovation and Infrastructure; SDG 11: Sustainable Cities and Communities; and SDG 12: Responsible Consumption and Production.

The Satrix Smart City Infrastructure Feeder ETF has an aggressive risk profile and will fall under the Global: Equity, General category of South Africa’s Collective Investment Schemes (CIS) funds. It offers SA investors offshore exposure to the US (47.9%); Japan (9.8%) and Sweden (6.1%) with smaller exposures to Australia, Canada, Germany, Finland, France, the UK and Taiwan.

*IPO closes on SatrixNOW on 13 July 2022 at midnight.

*SIM stands for Sanlam Investment Management